BUSINESS

The Australian dollar has opened lowerthis morning as the risk appetite of investors faded duringthe overnight session.

Most Asian markets ended higher Thursday, with Tokyo stocks getting a boost from a bullish earnings view and a slightly weaker yen, but declines in Chinese property developers weighed on shares in China and Hong Kong.

US pending home sales rose 2.0pct in December, above forecasts for a 1.0pct gain. US durable goods orders fell by 2.5pct in December, but was up 1.4pct excluding defence goods and aircraft.

By Rudi Filapek-VandyckDJIA up 4.39 to 11,989, the S&P500 up 2.91 to 1,299.54 and the Nasdaq up 15.78 to 2,755.There was plenty to get excited about for both bulls and bears last night and as a result financial markets moved rather erraticly, torn between good news and bad news. First signal with a bearish undertone came from Standard and Poor’s as the rating agency announced it cut Japan’s credit rating for the first time in nine years to AA- from AA. By doing so, S&P once again highlighted concerns about Japan’s fiscal sustainability in the longer run. The downgrade suggests Japan needs to make moves to rein in its debt, or at the very least put a plan in place to do so.In addition, economic data in the US further added to the day's disappointments. Durable goods orders fell 2.5% in December, below market expectations of a 1.5% gain, after aircraft orders declined by USD5bn. Initial jobless claims spiked 51K to 454K last week, but it goes without saying adverse weather provided an unquantifiable impact. For once, better news came from the US housing market with pending home sales printing above market expectations, rising 2.0%. Economists point out the index has rebounded sharply following the expiration of the homebuyer tax credit, and is back to levels that were occurring before its introduction.Corporate results in the US were once again mixed. Investors seemed to like the releases by Caterpillar and Qualcomm, but they showed disappointment post releases from AT&T and Procter & Gamble. After the closing bell shares in online retailer Amazon are under selling pressure post the release of Q4 results. The Dow Industrials traded above 12,000 for the second session in a row but in the end it had to retreat -again- below the magical psychological target. The S&P500 similarly missed the opportunity to (finally) close above 1300.Later today, all eyes will be firmly focused on the initial estimate of Q4 GDP data. The market is expecting the US economy finished calendar 2010 with an annualised growth rate of 3.5%.In Europe, mixed corporate results kept a lid on overall investor optimism. The German DAX closed 0.4% higher at 7156, the FTSE 100 fell 0.1% to 5965 and the Euro Stoxx 50 rose 0.7% to 2990. Keeping momentum positive on the old continent was the release of the Euro-zone Business climate index (Jan) which revealed a jump to 1.58 from an upwardly revised 1.38, pointing to outright European economic acceleration.FX markets experienced some genuine turmoil as the Japanese Yen turned south on news of the Japanese rating downgrade. The Aussie dollar was knocked around a few times, but ultimately saw buying support kicking in. AUD/USD opens in Asian trade on Friday morning at .9923, AUD/EUR opens at .7225, AUD/GBP opens at .6229, AUD/NZD opens at 1.2833 and AUD/JPY opens at 82.18.The Euro lifted to US$1.3755 from US$1.3640 over European and US trade and was near US$1.3725 in late US trade.Crude oil took its cue from weaker than anticipated economic data. The WTI futures contract for March fell 2.0% to USD85.61 per barrel. Spot gold equally had another challenging session. Spot gold dropped 2.5% to USD1312 per ounce overnight, its lowest level in over three months.Base metals, however, ticked higher following the previous day's rebound, with copper adding 2.1% to USD9523 per tonne on the LME, despite the mixed US data and despite expected seasonal slowdown in Chinese demand ahead of next week's Lunar New Year holiday. Recent outperformer tin added 1.2% to a new record high on continued tightening in supplies, while lead (+2.2%), aluminium (+2%), nickel (+0.8%) and zinc (+0.3%) were also all stronger.Agricultural commodities were mixed. Corn declined 1.1% after US exports of the grain disappointed expectations last week, and rain in Argentina boosted crop prospects, while wheat fell 1.2% but remained near its 2-year high. But sugar rose 3.2% on signs of rising demand in the EU and Russia. Soybeans increased 1%, and palm oil rose 0.4%.US treasury prices rose on Thursday (yields lower) after a successful sale of US$29 billion of seven-year notes. The Federal Reserve bought US$5.79bn of Treasuries maturing in the next 2-3 years. US 2yr yields fell by 4pts to 0.59% and US 10yr yields fell by 2pts to 3.39%.Today in Australia investors will zoom in on the Treasurer’s speech (around 1pm Brisbane time; 2pm Melb/ Sydney time) when he will flesh out the economic and fiscal impacts of the floods. Some commentators believe the floods, combined with the Gillard government's responses to it, are partially responsible for AUD weakness this month.SPI futures are indicating another subdued opening should be expected for the Australian share market today. SPI futures are currently indicating a gain of 12 points at the opening bell. However, the SPI has been far too optimistic whole week and why would it be any different today?[Note: All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts in the Cockpit and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.]FN Arena is building the future of financial news reporting at www.fnarena.com . Our daily news reports can be trialed at no cost and with no obligations. Simply sign up and get a feel for what we are trying to achieve.Subscribers and trialists should read our terms and conditions, available on the website.All material published by FN Arena is the copyright of the publisher, unless otherwise stated. Reproduction in whole or in part is not permitted without written permission of the publisher.

Telstra Corporation Ltd (ASX:TLS), Australia's biggest telecommunications company, will make an accounting gain of up to $150 million on an agreement to restructure its troubled 50:50 Hong Kong joint venture Reach.

Building and mining products provider Alesco Corporation Ltd (ASX:ALS) has posted an 82 per cent decline in net profit to $1.76 million for the six months to 30 November 2010.

Thanks to the strong dollar and shy consumers, plus the growing price war between Coles and Woolies, Australian inflation surprised on the downside in the December quarter.The headline rate for the CPI showed a 0.4% rise in the quarter, down from the 0.7% in the September quarter and well under the confident expectations from market economists for a 0.7% rise (and higher from a couple of forecasters).That was despite the expected sharp jump in fruit (up 15.5%) and vegetables (up 11.1%)in the quarter, an increase that is likely to be repeated to some extent this quarter because of the floods. They drove food prices up by 2.2% in the quarter, which was the biggest rise among all the groups in the CPI survey.The annual headline rate was 2.7% down on the 2.8% (restated) for the year to September.The underlying rate used by the Reserve Bank fell to the lowest level in a decade, and yet many in the markets remained unconvinced and were busy forecasting more price doom and gloom this quarter, after getting it wrong in the December quarter.That would normally raise the prospect of a rate cut in coming months, but the floods and the underlying price pressures from the resource boom will see the RBA sit pat for as long as possibleThe impact of the stronger dollar can be seen in the

The US Federal Reserve has again sat on its hands and not moved interest rates at its first meeting of 2011 in Washington. "The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period," the Fed said in its statement after the two day meeting.Wall Street eased after the statement came out as many investors had been looking for a more upbeat statement.That wording is the same as previous statements, which disappointed some commentators who believe the recent spate of better economic news could see the Fed giving an indication of a possible resumption of rate rises.Rates were cut to their current record lows in December 2008 and it has been the continuing high unemployment which has kept the Fed from lifting rates and trying a second round of quantitative easing which seems to have sparked a rebound in share prices and commodities, but not in interest rates which have risen, rather than fallen.But the Fed again said the economic recovery was "continuing" which was the same expression in the December meeting statement."Information received since the Federal Open Market Committee met in December confirms that the economic recovery is continuing, though at a rate that has been insufficient to bring about a significant improvement in labor market conditions."Growth in household spending picked up late last year, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit."Business spending on equipment and software is rising, while investment in nonresidential structures is still weak."Employers remain reluctant to add to payrolls. The housing sector continues to be depressed."Although commodity prices have risen, longer-term inflation expectations have remained stable, and measures of underlying inflation have been trending downward."Fed chief Ben Bernanke will discuss the outlook at the National Press Club on February 3.He is also due to testify before Congress on monetary policy later next month.So more of the same of what we have been reading from the Fed for more than a wear.

NSW households have turned their back on credit cards, slashing card debt by 20 per cent and trimming the number of cards owned. And, it was all done in the pre-Christmas period – traditionally a time of big card spending.

The Australian share market is slightly lower at lunchtime in the East, following a muted offshore lead.

Victorians are being saddled by more mortgage debt as a legacy of the property boom of 2010 says the latest ING Direct Financial Wellbeing Index.

As more people delay buying houses and opt to rent, rates for residential rentals are expected to climb when demand overtakes supply.

Australia’s economic activity has been on a moderating mode as early as November last year as the latest annualised growth rate from Westpac-Melbourne Institute Leading Index released on Thursday flashed a slowdown but still in line with long-term trend.

The initial explosion during the Pike River coal mine disaster in New Zealand last year possibly killed the 29 miners trapped underground almost instantly and those who first survived eventually died within minutes as the blast created a condition that humans would not withstand.

Households in regional Western Australia are streaking ahead of Perth residents when it comes to financial well-being, according new data released today.

PaperlinX Ltd (ASX: PPX) says it expects a net loss for the six months to December 2010 as the strength of the Australian dollar causes a non-cash impact related to currency hedging options.

ANZ Bank is predicting that home prices will stabilize this year and remain flat to an average of $550,000　as a consequence of expected rising interest rates.

Leighton Contractors (ASX: LEI) has been awarded a $110 million contract by multinational packaging company Amcor (ASX: AMC) for the design and construction of civil & building infrastructure at the Botany B9 Paper Mill in Sydney.

Downer EDI informed the Australian Stock Exchange on Thursday that it is set to take a hit of up to $250 million on its Waratah train project, apart from the $190 million provision the company had previously booked in June 2010.

The Australian dollar has been largelyunaffected by last night's FOMC rate announcement.Given there was no new news from the Federal Reserve,the reactioEdit Htmln from currency markets was relativelysubdued.

By Rudi Filapek-VandyckDJIA closed up 8.25pts to 11,985, while the S&P500 gained 5.45pts to 1296 and the Nasdaq closed up 20.25pts at 2739.50.First it was Barack Obama's State of the Union speech. Then it was speculation about what the Fed's monetary meeting might deliver. Then it was the outcome of the Fed's meeting. Buyers found enough reasons to move back into global equity markets and other risk assets on Wednesday. The Dow Industrials traded above the magical 12,000 level for most of the day, while the S&P500 continued threatening a break above 1300, but as the last hour of the overnight session kicked in, so too did selling orders and US indices closed well off their highs on the day.Another chance missed to take the 12 for the Dow and the 13 for the S&P500.There was a positive print from the US housing market to fuel overall optimism earlier on the day. US New Home sales proved stronger than expected increasing to 329,000 up from a revised 280,000 and higher than market consensus at 300,000. Economists were quick in pointing out the jump came off ultra-depressed levels and new homes sales remain at "extremely depressed levels" - Mr Market wouldn't have any of it and took the glass as being half full. Never mind that many an economist believes that, with mortgage rates rising in recent months, sales could decline further over the coming months (double-dip for housing anyone?).On the other hand, the optimists can counter that the overnight release marked the biggest increase in sales in 18 years and the highest level of sales in eight months.Before the opening bell on Wall Street, European investors were equally in a positive mood. The German DAX closed the session 1.0% higher at 7127, the FTSE 100 rose 0.9% to 5969 and the Euro Stoxx 50 rose 0.3% to 2968. Obama's speech did not only mention "spending freeze", the President also proposed to cut the corporate tax rate.Buying orders started accelerating once it had been confirmed the US Federal Reserve kept the federal funds target rate unchanged between zero and 0.25%. The Fed pretty much stuck to its views from late 2010 and will thus continue expanding its holdings of securities as outlined after the November meeting.Economists at CIBC summed it up as follows:"As expected, the Fed left interest rates unchanged at zero, and announced no change in its QE2 program, leaving rates at exceptionally low levels for an "extended period". The description of the economy was not much changed from the November meeting, seeing household spending picking up (previously described as only moderate) along with business equipment, but ongoing weakness in housing, and inflation stable. That slightly better description doesn't alter the view that the pace of growth is still "insufficient" in terms of generating job growth, and not a threat to inflation. QE2 plan stays at $600 bn, and there is no longer a vote against it, with Hoenig having dropped out as a voter, and Plosser, a QE critic, not opting to vote against the statement. No market impact likely, although the curve has priced in some rate hikes for late 2011 that we see as highly unlikely."Currency markets didn't really know what to make of it all and big movements remained absent last night. The euro held between US$1.3650 and US$1.3715 over European and US trade and was near US$1.3680 in late US trade. The Aussie dollar eased from US99.95c to US99.30c in European and US trade but was near US99.55c in late US trade. And the Japanese yen eased from 82.00 yen per US dollar to near JPY82.55, and was near JPY82.50 in late US trade.US treasury prices hit session lows (yields higher) following the Federal Reserve statement. A better-than-expected new home sales result and increased supply of bonds combined to weigh on prices. On Wednesday US$35 billion of five-year notes were sold and US$29 billion of seven-year notes will be sold on Thursday. US 2yr yields rose 5pts to 0.64% and US 10yr yields rose 9pts to 3.43%.Crude oil and base metals markets recovered strongly from steep losses in the previous session. The Nymex crude oil contract rose by US$1.14 to US$87.33 a barrel. Base metal prices on the London Metal Exchange equally took their cue from general optimism. Zinc rose 2.7%, lead rose 2.5% and nickel rose 2.3%. Share prices of mining stocks responded accordingly.Precious metals had a better session as well with silver significantly outperforming gold.Agricultural commodities were also mostly carried higher. Sugar was the biggest mover, rising 4.1% on renewed concerns about global supply this year. Wheat was also up strongly, rising 2.2% after Algeria reported it had accelerated its grain imports to try to head off possible social unrest over higher food prices. Corn rose 2.1% while soybeans rose 0.8%.Central bankers in New Zealand and Japan have kept interest rates unchanged, while India tightened. Later today we will welcome weekly jobless claims, durable goods orders and pending home sales data in the US. During the local session we will see the first corporate results and more trading updates and quarterly production reports being released. See our calendar for more details.Greg Peel returns on Monday. I will be on Sky Business today (Lunch Money, 12-1pm)[Note: All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts in the Cockpit and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.]FN Arena is building the future of financial news reporting at www.fnarena.com . Our daily news reports can be trialed at no cost and with no obligations. Simply sign up and get a feel for what we are trying to achieve.Subscribers and trialists should read our terms and conditions, available on the website.All material published by FN Arena is the copyright of the publisher, unless otherwise stated. Reproduction in whole or in part is not permitted without written permission of the publisher.

The Dow Jones Industrial Average rose above the 12000 mark for the first time in almost three years and flirted with that milestone throughout the session Wednesday, as investors cheered President Barack Obama's State of the Union address and unanimous decision by the Federal Reserve to stay the course on supporting the economy.

US new home sales soared by 17.5pct to 329,000 in December. It was the biggest increase in sales in 18 years and highest level of sales in eight months.

As expected, the local unit was fairly subdued throughout much of the Asian session due to a national public holiday in Australia.

FNArena has added another video to its Investors Education section on the website.ATW's Jerry Simmons has observed many USD-oriented assets are facing overhead resistance. This offers two potential scenarios. Either resistance proves too strong or we will experience a bullish break-out through these key price levels. Simmons expects a definitive outcome in this battle between bears and bulls within the coming week.SummaryIn this video, Jerry Simmons, Senior Mentor and Co-Founder of the Advanced Trading Workshop, Inc, analyses the trading range in which many USD-denominated currency pairs have found themselves for the past weeks, including the metals such as copper, gold, silver and platinum. He concludes that we should expect a breakout with a sustained directional move within a week. This is also in line with the big traditional January move. The same sideways market has characterised the 30 yr bond market and the 10 yr note markets and the same potential for a sustainable break-out exists in these two markets.Details:AUDUSD:There is overhead resistance at 0.9970 – 1.0030. If we get a confirmed break-out above 1.0030, chances are we will move further up quickly by 120 to 170 pips, to 1.0150 – 1.0200.Support below the market is to be found at 0.9800 – 0.9850. Should we get a confirmed break-out below 0.9800, a swift move further down by90 - 140 pipsto the next level at 0.9660 – 0.9710 can be expected, with the emphasis being on the lower margin of those two, i.e. 0.9660.COPPER:TTPs constructed in a recent video projected the top of the price move at current levels.Current levels could be exceeded up to a maximum level of 4.62 and still maintain the validity of the Double Top structure. The current level also re-tests the May 2008 high. If copper rolls over now, it would come off that May 2008 high and the Double Top formation, i.e. a down move could be expected to develop strong momentum and be sustainable.GOLD:The gold market is currently characterised by two key support zones below and 2 key resistance zones above3 the market:2nd resistance zone above: 1420 - 14351st resistance zone above: 1390 - 1395Current market1st support zone below : 1350 - 13552nd support zone below: 1317 - 1330.To view the ATW Strategic Prep Video (originally from November 29, 2010) titled "Analysis AUDUSD, US, HG, GC" click HERE or visit the FNArena Investors Education section of the website.Here's the direct link: http://www.fnarena.com/index2.cfm?type=dsp_front_videos&vid=22All views expressed are Jerry Simmons's, not FNArena's (see our disclaimer).Jerry Simmons has over 25 years of full-time trading experience. He is the senior partner and head mentor for the “Masters” Programme within the education system at New York based Advanced Trading Workshop (ATW). ATW recently set up shop in Australia through the establishment of ATW Australia (since mid-2010).FNArena is pleased to have Jerry Simmons as a highly valued contributor to its service which aims at both educating investors and assisting them with their own market analyses.The above mentioned videos can be accessed via the FNArena Investor Education section at http://www.fnarena.com/index2.cfm?type=dsp_minc_education)About ATW AustraliaFounded in June 2010, ATW Australia is a “one-stop-shop for all a trader needs to succeed”: quality education for new traders, superb advanced trading education, fast unfiltered data, a world-leading trading platform, customer oriented competitive brokerage, quality ‘Made in the USA’ specialized trading computers, trading magazines, and the all-important psychological mentoring and coaching for traders. The trading educational products are provided by the Advanced Trading Workshop, Inc. in New York, all other services are provided by a network of partners that were chosen based on their superior products and services in their specific field of expertise. FNArena is one such partner.To learn more visit www.advancedtradingworkshop.com.au.FN Arena is building the future of financial news reporting at www.fnarena.com . Our daily news reports can be trialed at no cost and with no obligations. Simply sign up and get a feel for what we are trying to achieve.Subscribers and trialists should read our terms and conditions, available on the website.All material published by FN Arena is the copyright of the publisher, unless otherwise stated. Reproduction in whole or in part is not permitted without written permission of the publisher.

By Chris ShawOil Search recorded solid production for the December quarter of 2010, the result being full year output of 7.66mmboe (million barrels of oil equivalent) came in a little above the company's guidance of a result between 7.2-7.4mmboe.Guidance for 2011 is for a result of 6.2-6.7mmboe. Analysts at Citi note the coming year will show lower production thanks to planned shut-downs in the second and fourth quarters related to work on the LNG project in Papua New Guinea.Longer-term, Deutsche Bank notes while production in 2012 should be higher than in 2011 it should then be relatively flat in 2013, which should limit earnings growth over the next couple of years as the LNG project continues to progress.Given the solid production numbers in the period, revenues for the December quarter were also better than the market had been anticipating, the US$156.8 million in sales revenues beating UBS's forecast for the period by 19%.The one minor disappointment in the quarterly report was what BA-ML viewed as an implied delay to drilling work at the Hides project, which is now scheduled for sometime this year rather than the previous guidance of sometime in the coming six months. RBS similarly picked up on this, but sees it as a short-term issue only for Oil Search.On the back of the better than expected result there have been increases to 2010 earnings forecasts across the market, BA Merrill Lynch lifting its net profit after tax forecast by 14% to US$131 million. RBS Australia's forecast for 2010 has increased by US$11 million to $131.2 million, while Citi has made minor changes to its numbers.Numbers for 2011 have generally been reduced though, Citi and Deutsche Bank both lowering their numbers by 16% to account for lower production in the year ahead. In earnings per share (EPS) terms forecasts for Oil Search according to the FNArena database now range from US9-11c for 2010 and from US10-12.8c in 2011.The changes in earnings forecasts factored in by the market has done little to impact on valuations for Oil Search, JP Morgan noting the lift in its 2010 numbers was largely offset by cuts in both 2011 and 2012.The impact on price targets have been similarly minor, UBS lifting its target slightly at the same time as BA-ML has dropped its target by 20c. The average price target according to the FNArena database stands at $7.94.Recommendations are also unchanged, the database showing Oil Search is rated as Buy four times, Hold three times and Underperform once. UBS retains its Buy rating, continuing to see upside for the stock as production increases and from the potential development of a third LNG train at the PNG project.This scope for expansion at the PNG project equally helps underpin Deutsche Bank's Buy rating, while JP Morgan is a little more conservative given an expansion requires sufficient gas reserves to be proved up. As this is yet to occur, the broker does not ascribe full value of any expansion in its model at present. Citi offers the same argument in justifying its Hold rating.RBS Australia also rates Oil Search as a Hold, but points out on a two to three year view the stock offers good value as the PNG LNG project is gradually de-risked and as expansion options crystallise.Shares in Oil Search today are slightly higher and as at 12.40pm the stock was up 3c at $6.78. This compares to a range over the past year of $4.97 to $7.20 and implies upside of almost 17% to the consensus price target in FNArena's database.FN Arena is building the future of financial news reporting at www.fnarena.com . Our daily news reports can be trialed at no cost and with no obligations. Simply sign up and get a feel for what we are trying to achieve.Subscribers and trialists should read our terms and conditions, available on the website.All material published by FN Arena is the copyright of the publisher, unless otherwise stated. Reproduction in whole or in part is not permitted without written permission of the publisher.

The Consumer Price Index for the housing group rose by 0.6 percent, compared to the all groups increase of 0.4 percent during the December quarter.

A new Queensland Reconstruction Authority has specifically been established to spearhead efforts to rebuild the state after the devastating floods.

Australian dairy farmers expressed concerns following Coles’ decision to slash the price of their home brand fresh milk by up to 33 per cent.