Thursday, April 27, 2006
Dollar Socked As ETF Moves Ahead
Some reports on currency developments. "News from central banks of China and the US battled for ascendancy in the currency market on Thursday, and it was Washington that ultimately had the most effect on the world's largest market. Beijing surprised traders by announcing its first interest rate rise for 18 months in an attempt to cool its overheating economy."
"But the day's moves were driven by dovish Congressional testimony from Ben Bernanke, the newish Federal Reserve chairman. Mr Bernanke pointed to signs of a slowing in the US housing market, adding that 'it seems reasonable to expect that economic growth will moderate towards a more sustainable pace as the year progresses.'"
"The market took this as a hint that the Fed may pause after taking rates to 5 per cent in May, sending bond yields lower and eroding yield support for the dollar."
"With Mr Bernanke also warning that the scale of the US current account meant there was a 'small risk of a sudden shift in sentiment that could lead to disruptive changes in the value of the dollar,' the greenback tumbled 0.6 per cent to $1.2521 to the euro and 1 per cent to $1.8013 against sterling, both seven-month lows."
"It also fell 0.7 per cent to Y114.01 against the yen and 0.8 per cent to SFr1.2605 versus the Swiss franc, both three-month lows, and 0.4 per cent to C$1.1230 against the Canadian dollar, a 14-year low."
"China's move appeared to be driven by fears of an investment bubble, with GDP growth reaching an annualised 10.2 per cent in the first quarter of the year. The People's Bank reacted by pushing the one-year lending rate from 5.58 to 5.85 per cent, its first rate rise since October 2004."
And Market Watch had this news. "At long last, a silver exchange-traded fund that has been in the works for over a year is expected to begin trading Friday. A registration statement for the highly-anticipated ETF from Barclays Global Investors was declared effective at 10 a.m. Eastern time Thursday by the Securities and Exchange Commission, clearing the way for the ETF to list, an SEC spokesman said."
"But the day's moves were driven by dovish Congressional testimony from Ben Bernanke, the newish Federal Reserve chairman. Mr Bernanke pointed to signs of a slowing in the US housing market, adding that 'it seems reasonable to expect that economic growth will moderate towards a more sustainable pace as the year progresses.'"
"The market took this as a hint that the Fed may pause after taking rates to 5 per cent in May, sending bond yields lower and eroding yield support for the dollar."
"With Mr Bernanke also warning that the scale of the US current account meant there was a 'small risk of a sudden shift in sentiment that could lead to disruptive changes in the value of the dollar,' the greenback tumbled 0.6 per cent to $1.2521 to the euro and 1 per cent to $1.8013 against sterling, both seven-month lows."
"It also fell 0.7 per cent to Y114.01 against the yen and 0.8 per cent to SFr1.2605 versus the Swiss franc, both three-month lows, and 0.4 per cent to C$1.1230 against the Canadian dollar, a 14-year low."
"China's move appeared to be driven by fears of an investment bubble, with GDP growth reaching an annualised 10.2 per cent in the first quarter of the year. The People's Bank reacted by pushing the one-year lending rate from 5.58 to 5.85 per cent, its first rate rise since October 2004."
And Market Watch had this news. "At long last, a silver exchange-traded fund that has been in the works for over a year is expected to begin trading Friday. A registration statement for the highly-anticipated ETF from Barclays Global Investors was declared effective at 10 a.m. Eastern time Thursday by the Securities and Exchange Commission, clearing the way for the ETF to list, an SEC spokesman said."
# posted by Ben Jones @ 11:44 AM 
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