Tuesday, November 07, 2006
Yield Woes For The Greenback
Bloomberg reports on currency markets. "The dollar had its biggest drop versus the yen in more than six weeks and slumped against the euro as the spread between U.S. and Japanese bond yields narrowed amid speculation interest rates will rise faster in Japan and Europe."
"Bank of Japan Governor Toshihiko Fukui today pledged to 'take action in advance' on monetary policy, suggesting the bank will increase its key interest rate for a second time. The U.S. currency fell earlier after Federal Reserve Bank of San Francisco President Janet Yellen said nations that buy U.S.- denominated assets may pare their investments."
"'Fukui's comments were directly responsible for driving Japanese yields up, and therefore the yen,' said Lara Rhame, a New York-based senior currency strategist at Credit Suisse. 'The dollar has been trading in step with relative yields.'"
"The dollar fell to 117.39 yen at 1:26 p.m. in New York, from 118.31 late yesterday, the biggest decline since Sept. 21. The U.S. currency traded at $1.2809 per euro from $1.2724. The dollar was lower against 15 of 16 most-actively traded currencies tracked by Bloomberg News while the yen was higher than 14 of 16."
"'U.S. interest rates have declined, which is always dollar negative,' said Grant Wilson, a currency trader at Mellon Financial Corp. 'The interest-rate scenario is going against the dollar.'"
"Ten-year note yields fell a second day after homebuilder Toll Brothers Inc. said its revenue dropped in the past three months. Signs housing is slowing may fuel speculation the Federal Reserve's next move will be to cut interest rates."
"'Globally, people are still trying to buy yield,' said Thomas Tucci, head of U.S. government bond trading at RBC Capital Markets in New York. The housing slowdown is 'the major backdrop of why we think the Fed will be easing.'"
"'We expect demand from Asia to materialize for 10-year notes here or at slightly higher yields,' said Bulent Baygun, head of U.S. interest-rate strategy in New York at Barclays Capital Inc. 'Asian investors are very convinced we're at the end of the tightening cycle.'"
"New Zealand's dollar, the world's best performer in the past three months, rose as investors sought nations with high or rising interest rates on expectations borrowing costs in the U.S. may fall next year. New Zealand's benchmark interest rate is a record-high 7.25 percent, or 2 percentage points more than the Federal Reserve target."
"'U.S. dollar weakness returned to the market and the New Zealand dollar should find strength from offshore moves,' said Sean Comber, markets economist at ANZ National Bank Ltd. in Wellington. The Reserve Bank of Australia is expected to raise rates today and 'this will keep the New Zealand dollar supported,' he said."
From MarketWatch. "Gold futures retreated from the session's high above $630 an ounce Tuesday to close with a slight loss as traders eyed weakness in the U.S. dollar, a decline in oil prices and the progress of the nation's midterm election."
"Gold for December delivery closed at $627.70 an ounce on the New York Mercantile Exchange, down 20 cents for the session -- following a rise to a high of $631.20, the contract's strongest level since Friday. On Monday, the contract fell by $1.30 after failing to break resistance at $630, with traders reluctant to stage a full retreat after last week's almost 5% gain."
"Weakness in the dollar provided some support for gold, as the greenback lose ground against both the yen and euro Tuesday. But easing concerns about high energy costs, on the heels of weaker crude prices, weighed on gold. Dennis Gartman, editor of The Gartman Letter, said he remains bullish about gold's long-term prospects but expects some consolidation after the metal's recent run-up."
"'Nothing grows to the sun... not even gold bullishness,' he said. 'Resistance at $630 is formidable for the moment, and support, as noted here yesterday at the $618-621 level is too.'"
"December silver futures fell 8.5 cents to close at $12.675 an ounce, January platinum was down $4.40 to end at $1,192.30 an ounce and December palladium shed $1.40 to close at $334.30 an ounce."
"Bank of Japan Governor Toshihiko Fukui today pledged to 'take action in advance' on monetary policy, suggesting the bank will increase its key interest rate for a second time. The U.S. currency fell earlier after Federal Reserve Bank of San Francisco President Janet Yellen said nations that buy U.S.- denominated assets may pare their investments."
"'Fukui's comments were directly responsible for driving Japanese yields up, and therefore the yen,' said Lara Rhame, a New York-based senior currency strategist at Credit Suisse. 'The dollar has been trading in step with relative yields.'"
"The dollar fell to 117.39 yen at 1:26 p.m. in New York, from 118.31 late yesterday, the biggest decline since Sept. 21. The U.S. currency traded at $1.2809 per euro from $1.2724. The dollar was lower against 15 of 16 most-actively traded currencies tracked by Bloomberg News while the yen was higher than 14 of 16."
"'U.S. interest rates have declined, which is always dollar negative,' said Grant Wilson, a currency trader at Mellon Financial Corp. 'The interest-rate scenario is going against the dollar.'"
"Ten-year note yields fell a second day after homebuilder Toll Brothers Inc. said its revenue dropped in the past three months. Signs housing is slowing may fuel speculation the Federal Reserve's next move will be to cut interest rates."
"'Globally, people are still trying to buy yield,' said Thomas Tucci, head of U.S. government bond trading at RBC Capital Markets in New York. The housing slowdown is 'the major backdrop of why we think the Fed will be easing.'"
"'We expect demand from Asia to materialize for 10-year notes here or at slightly higher yields,' said Bulent Baygun, head of U.S. interest-rate strategy in New York at Barclays Capital Inc. 'Asian investors are very convinced we're at the end of the tightening cycle.'"
"New Zealand's dollar, the world's best performer in the past three months, rose as investors sought nations with high or rising interest rates on expectations borrowing costs in the U.S. may fall next year. New Zealand's benchmark interest rate is a record-high 7.25 percent, or 2 percentage points more than the Federal Reserve target."
"'U.S. dollar weakness returned to the market and the New Zealand dollar should find strength from offshore moves,' said Sean Comber, markets economist at ANZ National Bank Ltd. in Wellington. The Reserve Bank of Australia is expected to raise rates today and 'this will keep the New Zealand dollar supported,' he said."
From MarketWatch. "Gold futures retreated from the session's high above $630 an ounce Tuesday to close with a slight loss as traders eyed weakness in the U.S. dollar, a decline in oil prices and the progress of the nation's midterm election."
"Gold for December delivery closed at $627.70 an ounce on the New York Mercantile Exchange, down 20 cents for the session -- following a rise to a high of $631.20, the contract's strongest level since Friday. On Monday, the contract fell by $1.30 after failing to break resistance at $630, with traders reluctant to stage a full retreat after last week's almost 5% gain."
"Weakness in the dollar provided some support for gold, as the greenback lose ground against both the yen and euro Tuesday. But easing concerns about high energy costs, on the heels of weaker crude prices, weighed on gold. Dennis Gartman, editor of The Gartman Letter, said he remains bullish about gold's long-term prospects but expects some consolidation after the metal's recent run-up."
"'Nothing grows to the sun... not even gold bullishness,' he said. 'Resistance at $630 is formidable for the moment, and support, as noted here yesterday at the $618-621 level is too.'"
"December silver futures fell 8.5 cents to close at $12.675 an ounce, January platinum was down $4.40 to end at $1,192.30 an ounce and December palladium shed $1.40 to close at $334.30 an ounce."
# posted by Ben Jones @ 1:12 PM 
