Friday, December 22, 2006


US$ Gains On Bond Sell-Off

Daily FX reports on the US dollar. "The US Dollar seemed to march to the beat of its own drum today, as a sharp rally defied weaker fundamentals and left it stronger against its major counterparts. Below-consensus results in key economic releases were not enough to slow a run on stops across USD-denominated pairs, with the EURUSD dropping 90 points off of intraday highs to $1.3122 at time of writing."

"A pronounced rally in US Bond Yields was also enough to fuel dollar demand in the USDJPY, which broke to fresh two-month highs at 118.92 through the afternoon."

"Fundamental data through the morning hours was broadly worse than expected, with a large drop in Ex. Transport Durable Goods orders leading the US-bearish news. Officials reported that headline Durable Goods Orders grew at 1.9 percent through November, but the more significant Ex. Transport figure actually declined for the second consecutive month."

"Given that this is the first consecutive drop since 2002, economists feel that risks likely remain to the downside for the domestic Durable Goods sector. Not to be outdone, Personal Spending and Income data was also below consensus, with slower income growth leading to a smaller than expected gain in the spending measure. October’s Personal Income growth was revised lower to 0.3 percent (from 0.4), while the current month’s change stayed the same at 0.3 Month-on-Month."

"On a more positive note, November was the first month since June that consumption growth exceeded that of incomes—implying that consumer demand had improved through the period."

"After range trading for the entire first quarter, the British pound broke out at the beginning of April to climb to a high just above 1.90 by mid May, marking its biggest 6 month gain against the US dollar in 16 years."

"However, price had a difficult time breaking above that level until November, when the GBP/USD surged nearly 1000 pips to a 14 year high of 1.9846, leaving traders wondering if the pair would be capable of targeting the elusive 2.0000 handle."

From MarketWatch. "Gold futures closed higher Friday and even after falling over the past two sessions, prices finished the week with a gain of more than $3-an-ounce as traders showed reluctance to sell the precious metal ahead of the Christmas holiday."

"Metals trading closed early Friday on the New York Mercantile Exchange and regular trading won't resume until Tuesday."

"'We can expect prices to be jumpy until the start of 2007, with a slight upward bias during next week's abbreviated trading,' said Peter Spina, chief investment strategist at 'Dips in the metals are finding buyers and the price seems to come right back up after any minor selling,' he said."

"Gold for February delivery closed up 70 cents at $622.30 an ounce. The contract had lost $3.80 over the past two sessions, but it still finished $3.20, or 0.5%, above last week's closing level of $619.10. March silver climbed 14.5 cents to close at $12.635 an ounce but after losing 22 cents in the last two days, it ended the week with a loss of 2.7%."

"January platinum lost $2.80 to end at $1,121.50 an ounce -- down $27 from a week ago, while March palladium closed off $1.10 at $326.20 an ounce to stand around $2 higher for the week."

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