Money and Metals

Bloomberg reports on the US dollar. "The dollar was little changed, trading near a six-week low against the euro, after the Democratic Party took control of the House of Representatives, giving them more power to block government spending and reverse tax cuts. Investors were reluctant to put big positions on the U.S. currency as the Democrats took five Senate seats from Republicans, one shy of the six needed for a majority, as a race in Virginia remained in doubt."

"'I don't expect substantial changes in legislation any time soon,' said Michael Malpede, a senior currency analyst in Chicago at Man Global Research. 'There will be a power gridlock. The impact on the dollar will be muted.'"

"'People are getting out of their short dollar positions as the result is pretty much what the market expected,' said Kathy Lien, chief currency strategist at Forex Capital Markets LLC in New York. 'We are still in a power gridlock. Investors are taking profit' by buying back the dollar.'"

"'I'm looking for a recovery in the U.S. dollar,' said Richard Grace, senior currency strategist at Commonwealth Bank of Australia in Sydney. 'I'm expecting an improvement in the trade deficit to $65 billion, which will help the U.S. dollar' gain to 118 yen and $1.26 per euro this week."

"The dollar fell 26 percent against the European currency in the three years through 2004 as the U.S. ran up a budget deficit of as much as $413 billion, from a surplus of $236 billion in 2000."

"The Canadian dollar finished lower against the U.S. currency on Wednesday, though it recovered some earlier losses, as dealers braced for an anticipated decline in Canada's trade surplus data due on Thursday."

"'It's still a data-sensitive environment and the trade numbers are seen as tier one,' said Jack Spitz, director of foreign exchange at National Bank of Canada. 'The downside risks are clear, given that there was a roughly 10 percent decline in the price of crude through the month of September.'"

From MarketWatch. "Gold futures closed Wednesday with a loss of more than $9 an ounce as traders responded to mid-term election results, a resounding victory for the Democratic Party, by locking in some of the metal's recent gains. The decline could come from the 'perception that the Democrats gain in Congress has eased some worry with a policy shift in D.C.,' said Peter Spina, at GoldSeek.com."

"But 'there is little doubt in my view that this is a misleading perspective as the shift in power to the Democrats will alleviate the massive trade deficit, issues in the Middle East, declining U.S. dollar,' he said."

"Then again, 'the chances of making any real significant changes that would in the end benefit the weakening U.S. dollar, look highly unlikely and any impressions otherwise will soon be discounted,' he said. Overall, 'gold has been unable to push above some resistance above and a brief consolidation is underway,' he said."

"Gold for December delivery closed down $9.40 at $618.30 an ounce on the New York Mercantile Exchange, its weakest closing level since Oct. 31. On Tuesday, the contract surpassed the $630-an-ounce level that has proved a crucial resistance point in the past week but then retreated to close slightly lower."

"'After the dust settles from the U.S. elections, the world will awake to see the U.S. more divided then ever before,' said Peter Grandich. 'Radicals around the world will take heart and the world will be as dangerous as ever before,' he said, adding that 'gold can only benefit in the long run.'"

"For now, other metals followed gold lower Wednesday. December silver futures fell 12.5 cents to end at $12.55 an ounce, January platinum fell $25, or 2.1%, to close at $1,167.30 an ounce and December palladium dipped $5.90 to end at $328.40 an ounce."