Thursday, January 11, 2007


Lowest Oil Price Since May 2005

The Associated Press reports on the currency markets. "The dollar rose against the euro and yen after the government said Thursday that jobless claims dropped last week to the lowest level in nearly six months. However, the dollar slipped against the British pound, which was boosted by an unexpected interest rate hike from the Bank of England."

"In afternoon New York trading, the euro bought $1.2889, down from $1.2936 late Wednesday in New York. The dollar also rose to 120.44 yen from 119.60 yen."

"The European Central Bank also met Thursday, but kept its key interest rate unchanged at 3.5 percent. However, ECB President Jean-Claude Trichet said the bank would engage in "very close monitoring" of inflation risks, a hint that a quarter-point increase could come in March."

"The markets are looking ahead to the Commerce Departments report on December retail sales on Friday."

The Financial Times. "The renminbi's long march against the US dollar reached a symbolic milestone on Thursday, breaking through the Rmb7.8 barrier as it continued to bear down on the Hong Kong dollar. It was the first time the renminbi had overtaken the Hong Kong dollar for 13 years."

"The Hong Kong dollar is pegged to its US counterpart at HK$7.80, but trades in a wider band set at HK$7.75-$HK7.85."

"But China's currency, which was pegged at Rmb8.3 to the dollar for 12 years until its revaluation in June 2005, has been on an inexorable rise as the Chinese government seeks to defuse political tensions arising from the country's huge trade surplus with the US."

"Oil plunged below $52 a barrel Thursday to its lowest price since May 2005, extending a sharp decline that has been led by dampened heating oil demand, but which could save consumers money on a more widely used fuel: gasoline."

"Crude oil has tumbled by 15 percent so far this year in a huge sell-off that was kicked off by investment funds last year, and then stoked by a historically warm U.S. winter that has left supplies of heating fuel barely touched."

"'The impact of the weather should not be overstated. Heating demand is a comparatively small part of global consumption,' said Antoine Halff, an energy analyst at Fimat. 'There's potential for a rebound.'"

From MarketWatch. "Gold futures closed modestly higher Thursday, but were still around 4% lower for the year so far as traders eyed mixed trading in the dollar and a steep oil-market decline in an effort to gauge the precious metal's next move. Gold for February delivery closed up 50 cents at $613.90 an ounce on the New York Mercantile Exchange."

"'Gold remains vulnerable on the downside as one inflation threat after another keeps being knocked down by the commodities complex,' said Jon Nadler, analyst at 'Indeed, it would take several sessions of prices higher than $615-$621 to restore some confidence on the bullion trading floors.'"

"One factor providing background support to gold is the continued turmoil in the Middle East, said Nadler. 'The U.S. appears all but set to continue spending vast sums of money (and lives) in its efforts to bring order (whatever that may be) to Iraq, force compliance by Iran, and defeat the Taliban in Afghanistan,' he said. 'Half a trillion dollars later, one is not surprised by the many exclamation marks contained in the various newsletters of America's deficit watchers.'"

"Rounding out the metals action Thursday, March silver futures closed up 1.5 cents at $12.46 an ounce, April platinum closed down $12 at $1,144.80 and March palladium rose $1.95 to end at $332.85."

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