Money and Metals

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."

# posted by Ben Jones @ 12:04 PM