Thursday, August 24, 2006


Traders Wait On Bernanke Speech

Bloomberg reports on the US dollar. "The dollar gained a third straight day against the euro, reversing earlier losses, amid lingering speculation the Federal Reserve will lift borrowing costs again this year. The currency has rebounded 1.3 percent after approaching a 16-month low at $1.2938 per euro on Aug. 21. Investors may also be reluctant to add to bets it will fall further before a speech tomorrow by Federal Reserve Chairman Ben S. Bernanke."

"'It is still a 50-50 chance the Fed may raise rates one more time,' said Richard Vullo, head of corporate foreign exchange sales at Fortis Financial Services. 'Until we have confirmation from the Fed, it is hard to see the dollar get hammered.'"

"'There's a little bit of hesitancy to short the dollar ahead of Bernanke's speech,' said Andrew Busch, a currency strategist at BMO Capital Markets. Fed Bank of Chicago President Michael Moskow two days ago said the central bank may need to resume lifting borrowing costs because inflation remains a threat."

The Daily FX. "The US dollar has become practically immune to the continual disappointments in US economic data. We started the week off with a sharp drop in existing home sales and today, we saw another fall in the sales of new homes along with a weaker than expected durable goods report. The signs of a slowdown in the US economy are clear, but the extent of the slowdown is not."

"This is the main reason why the US dollar has remained strong. Traders are still holding out for the possibility of another rate increase this year by the Federal Reserve. However given the recent trend of economic data and oil prices, we doubt that there is enough evidence to convince Federal Reserve Chairman Ben Bernanke to change his mind."

The Dow Jones Newswire. "Comex gold futures closed lower on Thursday at the New York Mercantile Exchange as the precious metal suffered losses at the hands of a rising dollar. At settlement, benchmark December gold was down $4.50 at $628.50 an ounce."

"During the session the contract traded to a high of $635.50 an ounce once the mixed U.S. economic data was announced, but the rally ran out of steam in the absence of follow-through buying, said analysts at MKS Finance in Geneva in a daily market comment."

"Dan Vaught, analyst with Ag Edwards, said it was surprising that the dollar rallied on the heels of the rather bearish nature of the reports but added that the absence of controversy involving Iran, North Korea and the Middle East 'robbed the bulls' of an upturn in gold prices."

"September silver ended 20.5 cents lower at $12.31 an ounce, with traders noting 'thin and stagnant' trading conditions with most players sidelined. 'We believe that silver will continue to follow the fluctuations of its sister metal and for the short-term remain within a $12.00-$12.70 range,' said the MKS analysts."

"The platinum group metals sector settled mixed, with October platinum ending the session up $1.20 at $1,237.70 an ounce. September palladium settled $2.40 lower at $344.45 an ounce."

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