Monday, May 01, 2006

 

US Dollar Slumps On Commodity Rally

Some currency and metals news. "The dollar fell to a seven-month low against the yen on expectations the Bank of Japan may begin to raise borrowing costs while the Federal Reserve prepares to end an almost two-year cycle of interest-rate increases. The U.S. currency pared the loss and strengthened against the euro after CNBC reported Fed Chairman Ben S. Bernanke said investors misunderstood his remarks last week to Congress when he said the central bank may pause to await more information."

"The dollar weakened to 113.38 yen at 4:30 p.m. in New York from 113.83 yen on April 28. It reached 112.35 yen, the lowest since Sept. 27. Against the euro, the dollar rose to $1.2584 from $1.2634, after declining to an 11-month low of $1.2690."

"The yen strengthened against all 16 of the most actively traded currencies. Bank of Japan Governor Toshihiko Fukui said April 28 that the central bank 'shouldn't rush, but at the same time we shouldn't be too relaxed and risk being late,' referring to when the bank will raise rates."

"The Canadian dollar rose for a fifth straight day, touching another 28-year high, as surging commodity prices bolstered the outlook for faster economic growth and higher interest rates. 'The Canadian dollar has gone through the roof,' said Eric Lascelles, a strategist in Toronto. 'It has all the markings of a commodity story.'"

"Commodities account for 35 percent of Canada's shipments abroad and 10 percent of its economy. The Bank of Canada last week raised its benchmark interest rate for a sixth time since September, to 4 percent, to keep the economy from overheating."

"Canada's dollar rose to 89.82 U.S. cents at 4:08 p.m. in Toronto from 89.55 U.S. cents on April 28. One U.S. dollar buys C$1.1133. The Canadian currency earlier touched 89.97 U.S. cents, its highest since it reached 90.04 cents on Feb. 13, 1978."

"Crude oil for June delivery advanced 2.5 percent today to $73.70 per barrel, and gold for June delivery climbed to $660.20 per ounce, a 0.9 percent increase. Oil is up 45 percent from a year ago, reaching a record $75.35 a barrel twice since April 21."

"Gold rose to a 25-year high in Asia as tension over Iran's nuclear program boosted the appeal of the precious metal as a haven and a hedge against rising oil prices. Mounting tension over Iran's nuclear program has helped boost gold prices and sent oil prices to a record.'

"'News events, particularly with this ongoing Iranian situation' and a desire to buy gold 'as a hedge against inflation,' will push prices of the metal higher, David Land, a market analyst at the Australian Stock Exchange. Gold for immediate delivery rose as much as $7.20, or 1.1 per cent, to $661.63."

"Gold for June delivery rose as much as $9.50, or 1.5 per cent, to $664.00 an ounce in after-hours electronic trading in the Comex division of New York Mercantile Exchange. It traded at $660 an ounce at 4.53pm yesterday in Tokyo."

"Silver for immediate delivery rose as much as 30 cents, or 2.2 per cent, to $14.02 an ounce. It traded at $13.82 in Tokyo. The metal rose for a second day after Barclays began offering an exchange-traded fund last week."

Comments:
Too bad Silver Wheaton didn't join the party. Until Friday's ETF launch SLW was one of the only pure plays in silver. It was down 1.6% at the close.
 
The Bloomberg piece still speaks confidently of the Fed "ending" its period of rate increases, but all of that was called into question today with Maria Bartiromo's journalistically questionable report on Bernanke.

My take on Bernanke's supposed admission is that he needed to make a retractment because of recent financial data, but a retractment this early on in his role as Fed chief would have looked bad. So instead, he points the finger at the media and says "You got it wrong".

...Either that or he'd had too much wine and was chatting up a hot babe.
 
...Either that or he'd had too much wine and was chatting up a hot babe.
# posted by sohonyc : 9:17 PM

That may well have had something to do with it! I have listened to Maria outside of her on-air reading gig. Let's just say she is not the sharpest knife in the drawer...IMO
 
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