Friday, July 28, 2006
US Dollar Falls On GDP Report
The Canadian press reports on why the greenback fell today. "The U.S. Commerce Department's report sent the greenback tumbling on currency markets. The report showed the economy improved by an annual clip of just 2.5 per cent in the latest quarter, falling below market expectations for a three per cent improvement. That reading was only about half of the 5.6 per cent annual rate clocked in the previous January-to-March quarter."
"'It was quite a bit weaker than the market was expecting,' said George Davis, technical analyst. 'What was really a drag on the number was the business investment component. And what we saw right after the number came out was basically the U.S. dollar weakening across the board.'"
"An end to the Federal Reserve's rate tightening is gloomy news for the U.S. dollar, which may extend its decline until next year. Steady rates mean returns from buying U.S. debt will be limited, which would chill demand from foreign investors. And if the U.S. economy is moderating, that means companies won't be seeing such robust growth, making them less attractive as well."
"Furthering the situation is that fact that central banks around the world are bumping up interest rates in response to inflationary pressures. 'Japan is going to continue raising rates, as will Europe,' said Jack Ablin, chief investment officer of Harris Private Bank. If U.S. interest rates level off, 'that spread is going to draw interest from the United States and into those markets.'"
"Gold futures posted modest gains Friday as a report of a slowdown in second-quarter GDP growth triggered a fall in the dollar. Gold for August delivery settled up $2.30 at $634.80 on the New York Mercantile Exchange, a gain of 2.4% on the week."
"Silver edged down 2.5 cents at $11.365 an ounce, platinum dropped $8.30 at $1,233.70 an ounce and palladium declined $6.30 at $314.15 an ounce."
"'With today's action putting the dollar in significantly oversold territory, there's a pretty good chance of a turnaround in the dollar near-term,' said Dale Doelling, market technician. 'If this occurs, it will most likely put pressure on the metals complex as August gold has moved up near trend-line resistance with today's rally.'"
From Reuters. "An International Monetary Fund staff assessment of the U.S. dollar has estimated it is overvalued by 15 percent to 35 percent. 'The real exchange rate appeared significantly overvalued, especially given the projected deterioration of U.S. net foreign liabilities,' IMF documents said on Friday that detail annual economic consultations with U.S. officials."
"'A staff assessment using macroeconomic fundamentals estimated the overvaluation in the 15-35 percent range,' the documents say."
"'It was quite a bit weaker than the market was expecting,' said George Davis, technical analyst. 'What was really a drag on the number was the business investment component. And what we saw right after the number came out was basically the U.S. dollar weakening across the board.'"
"An end to the Federal Reserve's rate tightening is gloomy news for the U.S. dollar, which may extend its decline until next year. Steady rates mean returns from buying U.S. debt will be limited, which would chill demand from foreign investors. And if the U.S. economy is moderating, that means companies won't be seeing such robust growth, making them less attractive as well."
"Furthering the situation is that fact that central banks around the world are bumping up interest rates in response to inflationary pressures. 'Japan is going to continue raising rates, as will Europe,' said Jack Ablin, chief investment officer of Harris Private Bank. If U.S. interest rates level off, 'that spread is going to draw interest from the United States and into those markets.'"
"Gold futures posted modest gains Friday as a report of a slowdown in second-quarter GDP growth triggered a fall in the dollar. Gold for August delivery settled up $2.30 at $634.80 on the New York Mercantile Exchange, a gain of 2.4% on the week."
"Silver edged down 2.5 cents at $11.365 an ounce, platinum dropped $8.30 at $1,233.70 an ounce and palladium declined $6.30 at $314.15 an ounce."
"'With today's action putting the dollar in significantly oversold territory, there's a pretty good chance of a turnaround in the dollar near-term,' said Dale Doelling, market technician. 'If this occurs, it will most likely put pressure on the metals complex as August gold has moved up near trend-line resistance with today's rally.'"
From Reuters. "An International Monetary Fund staff assessment of the U.S. dollar has estimated it is overvalued by 15 percent to 35 percent. 'The real exchange rate appeared significantly overvalued, especially given the projected deterioration of U.S. net foreign liabilities,' IMF documents said on Friday that detail annual economic consultations with U.S. officials."
"'A staff assessment using macroeconomic fundamentals estimated the overvaluation in the 15-35 percent range,' the documents say."
# posted by Ben Jones @ 2:04 PM 
