International Forex Inforamtion

After speculations set the real down last week versus the greenback before the G-7 meeting, now the outcome of world wealthiest nations discussions provided support for higher yielding currencies to grow, favoring the real in foreign-exchange markets.

The pound was once again hit by negative domestic data which forced the British currency down versus the euro, Swiss franc as manufacturing in the country declined to the lowest level in more than a decade, raising concerns about the British economic future.

The pound was once again hit by negative domestic data which forced the British currency down versus the euro, Swiss franc as manufacturing in the country declined to the lowest level in more than a decade, raising concerns about the British economic future.

Speculations suggesting that the world economic conditions will improve faster than previously imagined, helped stocks and commodities to rally today, consequently helping the Canadian dollar to grow versus its U.S. counterpart.

The Brazilian real continue to set new record highs for 2009 today as risk appetite emerged influenced by a Australian central bank decision to raise its benchmark interest rates, fact which was interpreted as an evident sign of economic improvement globally.

The Brazilian currency strengthened beyond $1.75 today versus the U.S. dollar, rate which was only perceived last year prior the global slump worst moments in the second semester of that year. Commodities and stocks also rose, attracting investors back to emergent markets and decreasing attractiveness for the U.S. dollar.

USD/BRL closed today’s session trading at 1.7598 in Sao Paulo.

If you want to comment on the Brazilian real’s recent action or have any questions regarding this currency, please, feel free to reply below.

The dollar sold off sharply in the Tuesday session, tumbling to its lowest level against the Aussie since August 2008 at 0.8917 and slumping versus the Canadian dollar to its lowest level since September 2008 at 1.0549. Commodities climbed higher, with spot gold touching a fresh record high beyond the $1,040 per ounce level and crude oil edging up past the $72 per barrel level. The catalyst for part of the move was unsubstantiated rumors that the Mid East oil producing nations would soon abandon the US dollar as the pricing currency for oil.

The US economic calendar is light this week, with the reports due out toward the latter half of the week including weekly jobless claims, wholesale sales, wholesale inventories and the August trade deficit.

(RTTNews) - Warning that volatile Afghan-Pakistan border region has become the "modern epicenter of jihad," the United States had ruled out any pull out from Afghanistan, saying a Taliban takeover of the south-west Asian country could hand al Qaida a "hugely empowering message."

Speaking at a joint interview with secretary of state Hillary Clinton, U.S. defense secretary Robert Gates said a victory for Taliban in the war-torn land-locked country would allow al-Qaida to gain foothold and would empower the terrorist network.

He said any withdrawal of U.S. forces from Afghanistan, before the mission to defeat al-Qaida and the Taliban is achieved, would give a huge boost to the Islamic radical movement in other parts of the globe.

He said a reassurance of no pull back from Afghanistan had been given to Pakistan despite a strategic review of the Af-Pak policy about "next step forward" in the Afghan war being underway in White House.

Gates said that there should be no uncertainty in terms of U.S. determination to remain in Afghanistan though there may be some short term uncertainty among U.S. allies, in terms of the new steps.

The defense secretary said the terrorists groups are aiming to hand out the same fate to the U.S. similar to that given to the Russians, referring to the Soviet defeat in the 1980s at the hands of Islamist fighters.

Gates remarks came as the Obama administration was reviewing its new Af-Pak policy and demands by the Generals for troop reinforcements for Afghanistan even as an equally strong lobby in Washington strongly opposes any move to send more troops.

(RTTNews) - Australia's monthly leading indicator of employment rose for the fourth consecutive month in October, after falling for a revised 19 consecutive months, the Department of Education, Employment and Workplace relations said Wednesday.

The leading indicator climbed to minus 0.934 in October from minus 1.104 in the previous month.The report said the indicator was still tentatively foreshadowing a quickening in the pace of employment growth to above its long-term trend rate of 1.8% per annum.

"Another two consecutive monthly increases in the Indicator are required to confirm that there was a turning point in the Indicator in June 2009", the DEEWR added.

Meanwhile, cyclical employment dropped for the 17th consecutive month in October.

The DEEWR leading indicator of employment is the average of four time series variables: the ANZ newspaper job ads series, Dun and Bradstreet employment expectations,Westpac-Melbourne Institute leading index of economic activity, and the Westpac-Melbourne Institute consumer sentiment index.

(RTTNews) - Wednesday, a slew of statistical reports are due from European economies. Among the major reports, German factory orders and Switzerland's unemployment data are expected to dominate the scene.

At 1.45 am ET, Switzerland's State Secretariat For Economic Affairs is slated to release its unemployment figures for September. The seasonally adjusted unemployment rate is expected to rise to 4.1% from 4% in August.

The GDP indicator data for July is expected from Statistics Finland at 2.00 am ET. The GDP indicator is forecast to drop 10.4% year-on-year, after the 11.1% decrease in the previous month.

At 3.00 am ET, trade balance figures for the Czech Republic is due. Economists expect a surplus of CZK 7.1 billion for August, down from July's surplus of CZK 12.3 billion.

At the same time, Romania's National Institute of Statistics is set to release its industrial production and retail sales data for August.

Norway's statistical office is scheduled to issue industrial production data for August at 4.00 am ET. Industrial output was down 0.5% on a monthly basis in July. Manufacturing output is forecast to rise 0.3% in August from last month but expect a fall 9.1% from a year ago.

At 5.00 am ET, the Eurostat is expected to release revised GDP numbers for the second quarter. According to initial estimate, the Eurozone economy contracted 0.1% sequentially and 4.7% annually in the second quarter. The statistical office is expected to confirm the initial estimate.

Germany's factory orders for August is scheduled for release at 6.00 am ET from the Federal Ministry of Economics and Technology. Economists expect factory orders to rise 1.1% on a monthly basis, after rising 3.5% in July. Meanwhile, production is forecast to drop 20% year-on-year compared to a 19.8% fall the last month.

(RTTNews) - Japan's leading index climbed to 83.3 in August from 82.5 in the previous month, the Cabinet Office said Wednesday. The indicator came in line with economists' expectations. The leading index has been rising now for six consecutive months.

The coincident index increased to 91.4 from 89.8 in July, remaining on a rising trend for the fifth consecutive month. Further, the lagging index increased to 83.8 from 82.8 in the previous month.

* G7 policymakers debate future of group as G20 rises

* Lack of action hurts G7's reputation, IMF chief says

* G7 retains claim on currencies, but compromised

* Could become faction within G20

By Brian Love

ISTANBUL, Oct 4 (Reuters) - After decades in charge, the club of rich, industrialised nations is fast losing sway as a share of global economic power shifts towards big developing countries.

That was a lesson of the Group of Seven's meeting in Istanbul at the weekend, when the absence of China showed the G7 could no longer tackle the world's economic problems on its own.

Finance ministers and central bank chiefs from the G7 implored China in a diplomatically worded statement to let the Chinese currency rise, as they have done for several years.

But China showed no sign of complying, and the G7 spent much of its time to discussing whether it should meet less often, with less pomp and perhaps with fewer public statements.

G7 statements have all too often "interested nobody because there's no follow-up most of the time", said Dominique Strauss-Kahn, the head of the International Monetary Fund.

Marco Annunziata, chief economist at UniCredit bank in London, said: "Istanbul is being seen by many as the G7's swan song, before it relinquishes power."

The G7's weakness in Istanbul was a far cry from the status it enjoyed before the financial crisis of the past two years.

Founded in 1976 to bring together top financial officials of Britain, Canada, France, Germany, Italy, Japan and the United States, the G7 guided world financial markets for decades.

In 2000, G7 central banks intervened in the foreign exchange market to boost the value of the euro off record lows.

Now, as the world emerges from the worst slump since the Great Depression, policymakers have once again to deal with imbalances in the global economy -- but China is a major source of the trade imbalances, and it is not a member of the G7.

G20

As a result, world leaders decided in Pittsburgh last month that the larger Group of 20, which includes China, India and other big developing nations in addition to G7 countries, should become the premier forum for managing the global economy.

China seized on the Istanbul meeting to ram that point home in a commentary by the official Xinhua news agency.

"As emerging markets have substantially increased their weight in the global economy, especially after the subrprime crisis exploded, the G7 cannot effectively address international economic issues, and its replacement by the G20 conforms with the tide of history," Xinhua said.

Before the Istanbul meeting, some G7 officials said the group might not bother to issue its customary policy communique. Tim Adams, a former U.S. Treasury undersecretary for international affairs who attended many G7 meetings, said there was speculation the G7 might even decide to shut itself down.

Those worst-case scenarios did not happen. Canada said it would host a G7 meeting next February, declaring that the group would continue to play a "pivotal role".

By issuing a communique, the G7 kept alive its claim to have some jurisdiction over key areas of global economic policy, such as foreign exchange.

But Adams, now managing director at the Lindsey Group, a macroeconomic consultancy in the United States, said the G7's image in the currency market had been somewhat compromised.

"To carry optimal weight and force, there has to be more than the G7 as part of the currency discussion," he said.

"What we saw yesterday was the G7 commenting about exchange rate policy including China, but China was not at the table at those discussions. With an empowered G20, that kind of commentary looks a bit awkward."

NEW ROLE

G7 officials did not reach concrete decisions in Istanbul on exactly how the group would continue operating and what role it would play.

But the common thread in comments from several officials was that the G7 should consider reinventing itself as a more informal forum which met less often to discuss important issues, including exchange rates.

"It might be better we meet more informally with less of an entourage," said British finance minister Alistair Darling.

There was also talk that the G7 might be used to prepare for G20 meetings. Conceivably, it could become the focus of a rich nations' faction within the G20.

"There is a long history of interactions among those individuals and those countries; there's an infrastructure and relationships that were incredibly important in a time of crisis," said Adams.

"So it's worth keeping it around for some time, as a kind of subcommittee of like-minded interactive entities, until they figure out how the G20 is going to work on a more operational basis."

One veteran G7 official, who declined to be named, remained sceptical.

"The moment you have to tell people you are still relevant, it's because you are not relevant," he said. (Additional reporting by David Lawder and Sumeet Desai; Editing by Andrew Torchia)

ATHENS, Oct 4 (Reuters) - Greece's conservative Prime Minister Costas Karamanlis conceded election defeat and resigned as head of his party on Sunday after results showed the opposition Socialists winning a comfortable governing majority.

"I want to congratulate (socialist leader) George Papandreou for his victory. As every Greek, I hope he succeeds in the great challenge to deal with difficult circumstances," he told reporters. "I assume responsibility for the defeat and start procedures for the election of a new party president."

With about 45 percent of the national vote counted, the Socialists were ahead with nearly 44 percent against the New Democracy's 35 percent.

Papandreou has promised to tax the rich and protect the poor, while pouring money into a slowing economy. (Reporting by Dina Kyriakidou and Harry Papachristou; Editing by Sonya Hepinstall)

BUDAPEST, Oct 4 (Reuters) - Hungary's central bank (NBH) has proposed regulations to the government to limit foreign currency lending, national news agency MTI said on Sunday, quoting NBH Governor Andras Simor.

An NBH press officer confirmed to Reuters that the bank had proposed loan-to-value and payment-to-income limits to cut the risk of non-payment as exchange and interest rate fluctuations can boost payments for households with foreign currency loans.

According to the proposals, the loan-to-value limit in mortgage lending would be 54 percent for euro loans and 35 percent for other foreign currencies. Monthly payments would be limited to 23 percent of the income of low-income households for all euro loans and to 15 percent for other foreign currencies.

"The new rules, which cut the country's financial vulnerability, could somewhat slow future economic recovery in the short term, but would lead to growth in a more healthy structure, and could even lift growth in the long term," the press officer said.

(Reporting by Sandor Peto; editing by John Stonestreet)

* Official projection shows Socialists winning Greek vote

* Voters punished conservatives for scandals, economy

(Updates with official vote projection, comments)

By Dina Kyriakidou

ATHENS, Oct 4 (Reuters) - Greece's Socialists have won Sunday's election with enough seats to form a government and oust conservatives who angered voters for failing to tackle graft and the economy, an official projection said.

If the final result matches the projection, PASOK will win an absolute majority in parliament at a time when the Mediterranean country, seen as the euro zone's weakest link, needs a strong government to deal with an economy on the verge of recession.

With about 20 percent of the vote counted, PASOK had won about 43 percent of the vote and the ruling New Democracy trailed with 36 percent.

The Interior Ministry projected, based on partial results, that PASOK had won nearly 44 percent of the vote, giving it 160 out of 300 seats in parliament, and New Democracy was trailing with about 34 percent and 92 seats.

"It is a great victory, a historic victory that means we have a great responsibility to meet the expectations of the Greek people," senior PASOK party member Evangelos Venizelos told reporters.

Thousands of jubilant PASOK supporters waited for party leader George Papandreou to appear at headquarters in central Athens, waving green flags and honking car horns.

Papandreou had promised a 3 billion euro ($4.36 billion) stimulus package on a platform of taxing the rich and helping the poor, while the outgoing Prime Minister Costas Karamanlis called for two years of austerity.

Markets were likely to be pleased with the result.

"Not because they have a preference between the two parties but because a new government with a parliamentary majority will have a fresh mandate to pursue its programme over a four-year term," said Alexander Moraitakis, president of the Greek brokers association SMEHA.

It was the third face-off for Papandreou, 57, a U.S-born soft-spoken politician, and Karamanlis, 53, a powerful speaker who appeals to the average Greek, both the heirs to two of Greece's most powerful political dynasties.

Opinion polls had showed most Greeks appeared ready to end five years of conservative rule that started amid high hopes of ending endemic corruption but soon sunk amid its own scandals.

Weakened by the scandals and a fragile parliamentary majority, Karamanlis called the snap poll, gambling he had a better chance of winning now than later in his four-year term.

Papandreou will face a budget deficit topping 6 percent of GDP, rising unemployment and deep unhappiness with the education system, social security and immigration.

"The main challenge for the new government is to submit a credible budget and a realistic timetable for reducing fiscal imbalances," said Nikos Magginas, an economist at National Bank.

After years of robust growth, Greece's output, about 2.5 percent of the euro zone's total economy, is set to slow to zero growth or even enter negative territory this year, with key drivers and job providers like tourism particularly hard-hit.

Economists question the wisdom of Papandreou's spending plan, saying it may lead to more borrowing in a country which already has the euro zone's second biggest debt after Italy as a percentage of GDP. (Additional reporting by Renee Maltezou, Harry Papachristou, Lefteris Papadimas, Ingrid Melander and George Georgiopoulos; Editing by Sonya Hepinstall)

($1=.6879 Euro)

By Emily Kaiser

WASHINGTON, Oct 4 (Reuters) - If this is the recovery, it doesn't look much different from the recession so far.

U.S. companies are still cutting jobs. German consumers aren't in a buying mood. In Japan, even a recent glimmer of good news was met with skepticism. Figures on Friday showed the unemployment rate unexpectedly fell in August, yet many economists questioned whether it was just a one-month blip.

"Did someone say that the crisis is over?" said Lena Komileva, head of G7 market economics at Tullett Prebon in London. "Even when a genuine recovery ... gets underway and lifts growth above the zero mark, broken credit channels are likely to perpetuate the feeling of recession."

That sinking feeling is likely to be on the minds of finance officials gathering in Istanbul this week for International Monetary Fund and World Bank meetings.

World Bank President Robert Zoellick warned leaders on Friday not to mistake signs of stabilization for a sustainable recovery and conclude their crisis-fighting work is done.

"The danger today is one of complacency," he said. "There will be a natural tendency to return to business as usual, and it will become harder to convince countries to cooperate in order to address many of the problems that led to this crisis, that put millions of livelihoods of people at risk."

That point probably won't be lost on European Central Bank and Bank of England officials, who hold policy-setting meetings on Thursday. Both are expected to keep benchmark interest rates steady at record lows, although they may acknowledge a somewhat brighter economic outlook.

MIDDLE OF THE "W"

Although the global economy appears to have resumed growth in the just-ended third quarter, there is no disguising the continuing pain in the labor market. In the United States alone, more than 7 million people have lost their jobs since the recession began in December 2007.

Employment normally doesn't rebound until well after the recession ends, but the high and rising tally bodes ill for consumer spending and debt repayment, both of which are essential to healing the economy and the banks.

That is why some economists are beginning to worry that this recovery may be nothing more than a brief upswing before the next slump -- the dreaded "W" shaped double-dip recession.

Harm Bandholz, an economist at UniCredit in New York, is concerned that once businesses have restocked depleted inventories and government stimulus spending runs dry, economic growth will evaporate.

Indeed, he said a disappointingly tepid report on manufacturing last week marked "the most clear-cut signal that the technical rebound of the U.S. economy might have reached the middle of the 'W'."

Consumer spending is at the heart of the U.S. economy, and it remains a weak link. The next big test of the consumer psyche comes on Thursday, when many of the largest retailers report September sales results. Analysts expect another lackluster month as households cut back on all but essentials.

William Dunkelberg, chief economist with the National Federation of Independent Business, said small retailers in particular were feeling the pinch from newly frugal customers. His group surveyed 827 small business owners in September and found that only 7 percent planned to create new jobs in the next three months while 16 percent planned to cut.

"We should see retailers getting ready to hire (for the holiday season) and in our survey that didn't happen," he said. "We still have more firms in retailing planning to reduce jobs over the next three months than planning to add."

Some of that is a consequence of the broken credit channels that Tullett Prebon's Komileva mentioned. Small businesses are having an especially tough time getting loans.

The same goes for consumers. Whether by choice or by force, Americans are paring credit card debt at a rapid clip. Federal Reserve figures due on Wednesday are expected to show consumer credit dropped by $10 billion in August, which would mark a seventh consecutive month of declines.

Demand looks weak elsewhere, too. Euro-zone August retail sales are scheduled for release on Monday, and are likely to show a decline, according to analysts polled by Reuters.

Yet there are a handful of prominent economists who think growth will snap back, even if consumers are downbeat. Dean Maki, an economist with Barclays Capital in New York, argues that businesses cut too deeply into payrolls and other expenses when the financial crisis peaked a year ago.

"The downturn proved deep, but the economy avoided a depression," he said.

"It is now rebounding in a way that is probably surprising to many firms, and profit growth is accelerating. Once firms get the sense that the recovery will last, we believe the investment cutbacks that looked prudent when sales were plummeting will start to look excessive." (Editing by Neil Stempleman)

(Embargoed for release at 0800 GMT, Monday Oct. 5)

* Mauritius best in African governance survey

* Southern African region outpaces other regions

* Somalia, Chad and Zimbabwe worst performers

CAPE TOWN, Oct 5 (Reuters) - Mauritius' government and private sector delivered the best services and public goods to its citizens, ranking first in an African-wide governance survey released on Monday by the Mo Ibrahim Foundation.

The Indian Ocean island scored top in all four of the survey's main categories, beating Cape Verde and next best Seychelles, with an average total score of 82.8 percent.

Fourth and fifth positions went to Botswana and Africa's strongest economy South Africa.

In its third year and for the first time including all 53 African countries, the 2009 Ibrahim Index of Governance measures 84 indicators -- broadly categorised under safety and security; participation and human rights; sustainable economic opportunity and human development.

Released at the University of Cape Town, it showed the Southern African region faring best on average with 58.1 percent, followed closely by North Africa at 57.7 percent. The worst performing region was central Africa, averaging 40.2 percent, with West Africa placed third at 51.7 and East Africa fourth at 46.9.

The seven countries of central Africa, including Democratic Republic of Congo and Equatorial Guinea, all ranked outside the top 20, and with the exception of Gabon, performed below the continent's average score.

Anarchic Somalia, a haven for pirates launching attacks on foreign ships and where an Islamist insurgency has helped paralyse effective government, propped up the index with the weakest total score of 15.2 percent.

It registered the continent's lowest scores for economic opportunity at 0.9 percent, and 9.1 percent for safety and rule of law.

Just above in 52nd place was Chad, and next was Zimbabwe, where the unity government of President Robert Mugabe and rival Prime Minister Morgan Tsvangirai faces an uphill battle to rebuild a ruined economy.

The Ibrahim Index of African Governance was created to help civil society track government performance in Africa. This year it was compiled with the assistance of various institutions, including Afrobarometer and the American University in Cairo.

Mo Ibrahim is a Sudanese-born telecommunications entrepreneur.

The full report is available at www.moibrahimfoundation.org (Reporting by Wendell Roelf)

Crude is trading at $69.50 as of 11:40am, London Time.

Oil fell below $70 a barrel on Friday due to concerns about the strength of the U.S. economy ahead of key employment data, while tensions between the West and Iran over the OPEC member's nuclear plan eased. "There is a bit of caution over the U.S. economic data which has been softer than expected," said Mark Pervan, senior commodity strategist at ANZ in Melbourne, adding that oil demand remained weak between the end of the U.S. driving season and the start of winter. Crude is trading at $69.50 as of 11:40am, London Time.

FXstreet.com (Córdoba) – The Euro is moving away from intra-day high. EUR/USD jumped to 1.4648 after the opening bell at Wall Street, posting the highest price of Friday. Greenback then recovery and the pair started to fall. Currently the pair is being traded below 1.4600 at 1.4584/87, or 0.32% above today’s opening price.

The Dow Jones is at the same levels it had at yesterday’s close. The stock index was falling more than 50 points after the opening bell but recovered and actually turned positive for a moment. Markets in Europe closed with declines of more than 1% on average.

FXstreet.com (Córdoba) – Greenback ended the week mostly up across the board but without considerable gains and far from intra-week highs. Stocks fell worldwide for the second week in a row. Economic data release during the week suggested that economic recovery will take time.

Dollar and Yen higher

The Dollar fell on Friday but it was not enough to erase previous gains. EUR/USD managed to finish below 1.4600, but also Greenback failed to hold below 1.4500. After the release of NFP the pair rally downside but quickly turn around and jumped. The Euro is still pulling back from year high at 1.4842.

Against the Yen, Dollar finished just a few pips above Monday’s opening price, but still remains under extreme pressure as trend favors the yen. USD/JPY fell at the beginning of the week to an 8-month low at 88.20. The Yen rose against European currencies and posted multi-month highs but finished far from those levels. EUR/JPY is holding above 130.00, a clear close below that level could send the pair lower and next week could be decisive. Against the Swiss Franc, the Yen confirmed a break of an important uptrend line, suggesting that CHF/JPY could fall further over the next days.

Cable revived in the middle of the week after tumbling on Monday, falling to multi-month lows across the board. The mid-term outlook for the Pound remains unclear and next week, the Bank ok England will decided on monetary policy. This event could bring sharp moves to the Pound.

Stocks lower

The International Monetary Found joined a lot of economist and said that the recession was over. But the problem now is the speed of the recovery. Economic information showed that the process could take a lot of time. The non farm payroll revealed that the U.S. labor market weakened in September. The unemployment rate rose to a 26 year high.

Stock fell sharply on Friday in Europe. On Wall Street, main indexes ended lower but far from intra-day low. Considering the week stocks plunged worldwide for the second week in a row and continues to pull back after posting year highs. On many markets the results for the week where the worst since mid June.

On the other side, Treasuries notes soared and finished at the highest level since May, despite that the Federal Reserve will soon end it purchases.

FXstreet.com (Córdoba) – Dollar closed the week with gains against the Swiss Franc for the first time after three with losses. USD/CHF moved away from intra-week highs. The pair peaked at 1.0452, posting a fresh 3-week high on Thursday but then pulled back ending Friday around 1.0350.

USD/CHF is moving with an upside trend in four hour chat but still faces a downside pressure in bigger timeframe charts.

The Swiss also lost ground against Cable. GBP/CHF pulled back strongly after falling to a 7-month low at 1.6219. The pair managed to finish the week above 1.6500.

EUR/CHF plunged Thursday and Friday, losing completely the gains of Wednesday: the pair rallied surprisingly jumping from 1.5070 to 1.5240 bringing the attention to the Swiss National Bank.