Money and Metals

A look at the end of the trading week. "The dollar slumped to one-year lows versus the euro, pound and Swiss franc and a seven-month low against the yen Friday after the U.S. nonfarm payrolls number came in far lower than expected."

"'The [foreign-exchange] market now accentuates the negative in U.S. economic releases and minimizes the positive,' said Kathy Lien, chief strategist at FXCM. 'There is little reason for any traders to remain dollar bulls.'"

"'It was the worst of both worlds; slower growth and rising inflationary threats,' said Ashraf Laidi, chief currency analyst at MG Financial Group. 'Today's report should support the current sell-off, paving the way for further declines on the basis on escalating chances of a June pause in rates.'"

"In New York trading, the euro strengthened to $1.2764, the highest level since May 16. It last traded up 0.3% at $1.2736. The dollar weakened 1% to 112.34 yen, after dropping to 112.22 yen, the lowest level since Sept. 26."

"The British pound traded at $1.8591, up 0.4%, after touching $1.8622, the highest level since May 13. The dollar weakened to 1.2213 Swiss francs, the lowest level since May 20, before trimming losses to trade at 1.225 Swiss francs, down 0.2%."

"The greenback has lost about 5.2% against the euro and 4.5% against the Japanese yen since April. 'The only one who doesn't know the U.S. dollar is dead is the U.S. dollar,' said Peter Grandich."

"T.J. Marta, senior currency strategist at RBC Capital Markets, said markets are looking to next week's Fed policy meeting for further clues on the U.S. interest-rate outlook. Traders will also scrutinize the U.S. trade gap report for March next week, he said."

"All indications are pointing to a 'negative number,' said Marta. 'If the Fed comes out dovish and the trade-balances number comes out worse, the dollar could really get hurt.'"

"The U.S. Treasury Department's report on international economics and foreign exchange, scheduled to be released next week, could further weigh on the U.S. currency, according to MG's Laidi. 'The next shoe drop in the dollar will be next week's U.S. Treasury report,' he said. 'The report is a lose-lose situation for the dollar regardless of whether the U.S. Treasury names China as a currency manipulator.'"

"Gold futures climbed Friday to tally a gain of almost $30 an ounce and close at their highest level in nearly 26 years as worry about the nuclear standoff with Iran and fresh weakness in the U.S. dollar combined to bolster metal demand. Gold for June delivery rose to a high of $686.50 an ounce. The contract closed up $7.80 at $684.30 an ounce."

"'Gold prices have made new major-trend highs on each day this week, underpinned by geopolitical uncertainty and fresh waves of fund demand,' said economists at Action Economics. A lack of forward hedging by gold miners also has helped support prices, pushing the euro price of gold to a fresh record peak, they added."

"July silver closed at $13.89 an ounce, up 6.5 cents for the day, and up 1.9% for the week. July platinum rose $12.70 to close at $1,189.10 an ounce while June palladium shed $1.50 to finish at $378.75 an ounce. Last Friday, platinum prices ended at $1,163.30 and palladium finished at $377.05."

"Brazil, Russia, India, and China (referred to as BRIC group), which currently manifest the world’s highest economic growth rate, have surpassed G7 countries in their forex/gold holdings for the first time in history."

"The forex/gold holdings of BRIC went up by 40%. At present, China accounts for 68% of forex/gold reserves of BRIC countries. However, according to Japanese experts’ estimates, the growth of its forex/gold reserves has slowed down while those of Russia, India and Brazil now increase by more than 10% a year.'

"Russia, which ranks second in forex/gold reserves in BRIC after the PRC, rivets particular attention in this connection. BRIC countries, the Nihon Keizai writes, will continue to increase their influence on the world currency market while having mounting impact on the rate of the US dollar, in particular."

Meanwhile, the blame is falling on the Fed. "President Bush said in an interview on Friday that new Federal Reserve Chairman Ben Bernanke did not have a credibility problem."

"Asked if the rising price of gold, increasing bond yields, a falling U.S. dollar and a report that Bernanke had been misinterpreted when he delivered testimony to Congress last week meant that the Fed chief had a credibility problem, Bush told CNBC television: 'No.'"