Money and Metals

MarketWatch reports on currencies. "The dollar fell against major currencies Monday, hitting an almost two-month low versus the euro, on speculation reports this week will show signs of slower U.S. economic growth, boosting expectations the Federal Reserve will cut interest rates soon. At the same time, the yen rallied versus both the dollar and euro after Japan's Chief Cabinet Secretary Yasuhisa Shiozaki said that the end of falling prices was near."

"'The greenback is a touch weaker against the major currencies, and we doubt that this week's events will provide major support for the greenback either,' said Marc Chandler, global head of currency strategy at Brown Brothers Harriman."

"Late in New York, the euro stood at $1.3182, compared with $1.3163 late Friday. In intraday trading, it rose to $1.3197, the highest level since Jan. 3. The dollar was quoted at 120.74 yen, compared with 121.03 yen. The British pound traded at $1.9616, compared with $1.9628. The dollar changed hands at 1.2317 Swiss francs, compared with 1.2332 francs."

"Currency traders have a wide range of economic data to sift through this week, including the Institute for Supply Management index, orders for durable goods, home sales, and a second reading of fourth-quarter gross domestic product. The Commerce Department will also report on the core personal consumption expenditure index, the Federal Reserve's preferred inflation measure."

"'Clearly the situation in Iran has already provided influence on a number of fronts including boosting both oil and gold prices, whilst a degree of dollar selling has also been seen at the same time,' said David Jones, chief markets analyst at CMC Markets, in a note."

"'Any suggestion that the U.S. will take direct action against Iran -- a point which is certainly gaining gravitas -- could initiate a further run of dollar selling and with the greenback currently sitting comfortably off recent lows, there's certainly scope for downside pressure to be felt,' he said."

"Adding pressure was a survey of 47 central banks by Central Banking Publications Ltd, a financial publishing company. The survey found nearly nine out of 10 central banks felt there was likely to be more reserve diversification. The 47 central banks control around 30% of global reserves."

"'We suspect that the [People's Bank of China] was probably not one as its $1 trillion of reserves is alone about 20% of the $5 trillion global total. But the news could clearly put some pressure on the dollar,' said Steve Barrow, chief currency strategist at Bear Stearns."

From Bloomberg. "The Japanese yen rose against 14 of 16 most-active currencies after Japan's Chief Cabinet Secretary Yasuhisa Shiozaki said prices are 'picking up.' The nation's economy grew at the fastest pace in almost three years in the fourth quarter. Bank of Japan policy makers last week doubled borrowing costs, saying higher rates would help sustain economic growth."

"'The Japanese government is going to allow the BOJ more flexibility in gearing rates higher,' said Greg Salvaggio, vice president of capital markets at currency-trading firm Tempus Consulting Inc."

"The yen also gained for a second day versus the dollar as Japanese companies repatriated overseas assets before the end of the fiscal year on March 31. 'There are signals of repatriation,' said Firas Askari, head of foreign exchange trading at BMO Capital Markets in Toronto. 'The dollar is poised for a little bit of a sell-off.'"

"Investors bought yen-denominated assets including stocks, and pushed the Tokyo-based Topix index to the longest winning streak since December. 'The annual repatriation on behalf of Japanese corporations is beginning to cause a temporary and artificial bid to the yen,' said Michael Woolfolk, senior currency strategist at the Bank of New York."

"Gold in New York rose, extending a rally to a nine-month high, as climbing energy costs boosted the appeal of the precious metal as a hedge against inflation. Gold has more than doubled and oil has almost tripled in the past five years."

"Gold futures for April delivery rose $3.10, or 0.5 percent, to $689.80 an ounce on the Comex division of the New York Mercantile Exchange, the highest close since May 17. Prices climbed 2.1 percent last week and have gained 8.1 percent this year."

"'The oil market and the general strength of commodities are helping gold,' said Stephen Platt, a commodity analyst at Archer Financial Services Inc. in Chicago. 'Longer-term, there are still inflation concerns.'"

"Gold's rally may stall after seven weekly gains as demand eases, some analysts said. Investor demand for gold increased in the fourth quarter from the previous three months for the first time in a year, the producer-funded World Gold Council said earlier this month. UBS Ltd., Europe's biggest bank by assets, today raised its three-month forecast for gold to $750 from $700. Before today, gold has climbed 13 percent since Jan. 5."

"'There are questions about the durability of demand,' Platt of Archer Financial said. 'Most of the buying from an investment basis has been done. Buyers are going to be more cautious as gold moves into the $700 area.'"

"Silver reached the highest since in nine month. Futures for March delivery rose 9.5 cents, or 0.7 percent, to $14.69 an ounce after climbing to $14.86, the highest since May 12. Prices have gained 15 percent this year."

"Investment in the StreetTracks Gold Trust, the exchange- traded fund backed by physical gold, rose to a record $10.5 billion last week, making it one of the biggest single investment vehicles in gold. Only six mining companies, including Barrick Gold Corp., Newmont Mining Corp. and GoldCorp Inc., have bigger market values."