Money and Metals

The Associated Press reports on the US dollar. "The dollar dropped against other major currencies Friday and fell to a year-and-a-half low against the euro, weakened by expectations of higher European interest rates. In late afternoon New York trading, the 12-nation euro bought $1.3079, up from $1.2941 late Thursday in New York. The euro hasn't traded above $1.30 since April 2005 and it briefly topped $1.31 in trading before easing back."

"The dollar slipped against the Japanese currency, falling to 115.75 yen from 116.26 the day before, while the British pound rose to $1.9317 from $1.9156."

The euro was aided by a report which showed that business confidence rose unexpectedly for a second month in a row to a 15-year high. Thursday's Thanksgiving Day holiday may have made markets more volatile by keeping trading volumes relatively light. Many U.S. dealers also took Friday off as part of a long holiday weekend."

"The Ifo report firmed up expectations that the European Central Bank will continue to raise interest rates, with the next increase forecast for December. In contrast, many believe that the Federal Reserve will keep rates on hold or cut them next year."

"The ECB has raised rates five times since last year to 3.25 percent, while the Fed has left its rate at 5.25 percent for three months after 17 hikes since June 2004."


"In other trading, the dollar bought 1.2105 Swiss francs, down from 1.2246 late Thursday, and 1.1331 Canadian dollars, down from 1.1419."

"Analysts said that the dollar's fall was spurred by increasing worries that the interest-rate differential between the U.S. and other parts of the world will narrow soon."

"The concerns come from a mix of developments, including speculation that the U.S. central bank may lower interest rates earlier than expected, as well as comments from China warning about the risk to Asian currency reserves from further dollar declines."

"Gold futures rallied Friday as the dollar tumbled to a 1 1/2-year low against the euro and an almost two-year low against the British pound on concerns about flagging economic growth in the U.S. Platinum continued its trend of extreme volatility, rising $34 in the Friday session alone."

"With the stock market closed at 1 p.m. Eastern, gold for December delivery was up $9.60 at $638.60 an ounce in electronic trading. The New York Mercantile Exchange is closed for trading Friday, leaving the electronic Chicago Board of Trade contract as only way to trade the precious metal. It's the first time the CBOT contract has been open while Nymex is closed."

"'The dollar is taking it on the nose as slow holiday trade in the U.S. is also helping to push gold much higher,' said Kevin Kerr, a trader and editor. 'Gold seems to be building a consensus of buyers at this level and many bullish factors are at work -- the bearish turn for the dollar seems to be even more juice for the gold price,' he said."

"Silver futures were up 43 cents at $13.47 an ounce. Platinum recovered from a steep sell-off Wednesday to trade up $34 at $1,188 an ounce. Palladium was up $4.95 at $330.95 an ounce."