Monday, July 03, 2006

 

US Dollar 'Holds Onto Fridays' Losses'

A short trading day for money and metals. "The dollar fell to a more than three-week low versus the euro, but rose against the yen Monday, with many traders sidelined ahead of the Independence Day holiday. The greenback lost strength against the euro after government reports showed weaker-than-expected manufacturing and construction-spending activities."

"In New York trading, the euro stood at $1.2806, compared with $1.2791 late Friday. It rose as high as $1.2821, the highest level since June 7. The dollar changed hands at 114.72 yen, compared with 114.42 yen. The dollar was at 1.2235 Swiss francs, compared with 1.2222 francs."

"'The dollar has largely held onto Friday's losses, and really further direction here may not be forthcoming until we see the non-farm-payroll data for June,' which is scheduled for Friday July 7, said Andy Cottrill, a foreign-exchange trader. This reading 'will be instrumental in deciding whether or not the Fed breaks with rate hikes at the August meeting.'"

"Overnight, the yen initially strengthened on the back of bullish results from the Bank of Japan's quarterly tankan survey of business sentiment. But the gains fizzled.
The tankan survey showed the benchmark large-manufacturer business-sentiment index rising to 21 from 20 last quarter."

"'The release removed all doubt that BoJ will have to lift its zero-interest-rate policy in the near future, but it did not resolve the question of whether the move will happen in July at next week's BOJ policy meeting, or will be delayed until August as Japan continues to grapple with the fallout from the Fukui scandal,' said Boris Schlossberg, currency strategist."

"Gold rose to its highest price in nearly four weeks on Monday, tracking strong gains in New York and gathering support from firm oil prices, dealers said. 'Gold is still benefiting from the rally late last week, resulting from a less hawkish Fed statement and the accompanying dollar weakness,' said Yingxi Yu, precious metals analyst at Barclays Capital."

"Spot gold hit a high of $620.50 an ounce before easing to $619.35/620.35 by 0944 GMT, higher than $612.60/613.60 last quoted in New York on Friday. Platinum rose to a four-week high of $1,242 an ounce before retreating to $1,241/1,246, up from $1,224/1,234. Palladium rose to $323/328 an ounce from $314/320. Silver hit a three-week high of $11.20 an ounce before falling to $11.17/11.23 , versus $10.96/11.06 in New York.'

"Analysts noted reports suggesting that some central banks should buy gold. A senior government economist said China should take advantage of any weakness in bullion prices to build up its official gold holdings as part of a strategy for diversifying its foreign exchange reserves."

"The United Arab Emirates said the central bank was sticking with plans to convert up to 10 percent of its currency reserves into euros and could convert up to 10 percent into gold."

"China should take advantage of any weakness in bullion prices to build up its official gold holdings as part of a strategy for diversifying its foreign exchange reserves, a senior government economist said Monday. Xia Bin, head of the financial research institute of a think tank under the Cabinet, also proposed that Beijing allow the yuan to fluctuate within a wider range against the dollar."

"'It is practical for China to increase its holdings of gold by choosing an appropriate time to buy, because compared with other big trading countries the percentage of gold in China's reserves is seriously low,' Xia said."

"The yuan is allowed in theory to rise or fall by 0.3 percent against the dollar on a given trading day, but in reality it has fluctuated by only a fraction of that each day since the currency was freed from a dollar peg last July."

"Xia said that even if China increased its exchange rate greatly, the United States would still have a large trade deficit because part of the Sino-US trade gap would be replaced by those between the United States and other southeast Asian nations."

Comments:
What a diference from the 80's, when each rise in gold was met with a rumor of CB selling! Although it was a light day, the technical picture for gold improves. Wednesday will be interesting.
 
I don't think the CB's will really sell their reserves. That is just jawboning. What country wants to be first to admit it has no gold?
 
another UAE article.
UAE Central Bank set to enter the gold market
 
John, why is the UAE saying on the one hand that gold is too expensive to buy, while also saying they are entering the market?
 
you got me! I think they're waiting for lower prices.

plenty of new ways to play a falling dollar/rising commodity prices.


Rydex launches more currency ETFs
After euro fund, firm expands with half-dozen more on NYSE


Tapping Into The ETF Gusher

Gold Set for Seasonal Boom

some of the new ticker symbols

DJP(I'm really interested in this one)
FXB
FXC
FXM
FXA
FXF
FXS
XES
XME
GDX

does anyone have any insight into RNE? it's an eastern europe fund with a 33% dividend yield.
 
Another question: what's the logic of 'saying' you're going to buy that much gold (an amount which moves markets) before actually buying?

If I were S.A. and getting ready to commit 10% of reserves (who knows what that stupendous number is), I'd talk trash about gold for a few months first...
 
UAE is putting $2.3 billion into gold and some money into the euro.
 
Happy 4th everyone! The dollar's future is questionable, but America's independence is not.
 
the dollar(as in a specific weight of gold or silver) is doing fine, it's the federal reserve notes that are struggling.
 
John, thanks for the heads up on the currency ETFs.

RNE's dividend seems misleading. When I look at historical prices and view dividends only, I see there has been no dividend since 2004.

21-Dec-04 $ 6.432 Dividend
28-Jun-04 $ 1.961 Dividend
22-Dec-03 $ 5.164 Dividend
26-Jun-03 $ 0.028 Dividend
20-Dec-02 $ 0.577 Dividend
26-Jun-98 $ 0.67 Dividend
29-Dec-97 $ 3.602 Dividend
10-Jul-97 $ 0.018 Dividend
27-Dec-96 $ 0.065 Dividend

It looks like the dividends do not pay out regularly (unless Yahoo has incomplete data). Plus Yahoo always takes the last dividend payout and multiplies it by the frequency of payouts which is not good.
 
Hey Mike C.
7/5/06 11:45 ET
Gold spot price: 623.50
Aug. Comex Futures: 622.50
 
Out at the peak- thanks.
 
Silver lease rates:
http://www.financialsense.com/fsu/editorials/2006/0705.html
 
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