Money and Metals

Reuters reports on currencies. "The yen extended losses on Friday as doubts grew about whether finance officials at the Group of Seven meeting in Germany this weekend would take any action to stem the Japanese currency's decline. The yen fell against the euro for the fourth straight day and against the U.S. dollar for the third session in a row."

"European policy-makers have been calling for the G7 to tackle the yen's weakness as it makes European exports more expensive in Japan and makes Japanese exports cheaper in Europe. However, officials from Washington and Tokyo have played down the issue."

"'There is not much to do before the communique comes out,' said Enrico Caruso, chief currency trader at a currency hedge fund. 'Something coming out on the carry trade would be the most disastrous for the market as no one has positioned for it.'"

"The dollar was up 0.5 percent at 121.62 yen, rising as high as 121.75, according to Reuters data, it's highest since Jan. 31. The euro was down 0.2 percent against the U.S. dollar at $1.3008, surrendering gains made after European Central Bank President Jean-Claude Trichet on Thursday signaled a ECB interest rate rise was likely in March."

From Bloomberg. "Canada's dollar rose the most in more than seven months and bonds declined after a government report showed employers added more jobs in January than expected, suggesting an economic slump may be easing."

"Some questioned the statistics' accuracy. Previous government data had shown the economy barely growing, making the job gains unusual. 'Today's job numbers have provided a very good excuse to investors to buy the Canadian dollar,' said Meg Browne, senior currency strategist at Brown Brothers Harriman. 'The currency needed a pullback after a recovery in the crude oil prices. Investors are choosing to ignore this talk of data credibility, or a revision.'"

"Canada's dollar advanced 0.85 percent to 85.34 U.S. cents at 2:56 p.m. in Toronto from 84.55 cents yesterday. It was the biggest gain since June. 29, and the largest daily rise among the 16 primary currencies Bloomberg tracks. One U.S. dollar buys C$1.1719. Yesterday, the Canadian currency touched 84.20 cents, the lowest since Nov. 21, 2005."

"Brazil's real fell as investors refrained from buying local assets following calls from the president's Worker' Party for the central bank to change monetary policy to weaken the currency and spur growth."

"'It's not that anything radical will happen, but when you see the central bank president coming under pressure like this, it makes people nervous,' said Paulo Fujisaki, foreign exchange analyst at Socopa Corretora in Sao Paulo."

"The real fell for a third day, dropping 0.7 percent to 2.1080 reais per dollar at 2:31 p.m. in New York, after most trading had ended in Brazil. The Brazilian currency on Feb. 6 touched 2.0745 reais per dollar, the strongest since May 11. It has gained 1.3 percent against the U.S. currency this year, making it the best performer of the 16 major currencies. Dollar purchases by the central bank on the spot market today also contributed to losses in the currency, Fujisaki added."

"Brazilian President Luiz Inacio Lula da Silva's party has demanded that the central bank make changes to its monetary and currency policies, according to a statement posted on the party's Web site yesterday. 'A new monetary and exchange rate policy by the central bank is a necessary condition for the sustained growth of the Brazilian economy,' the statement said."

"Gold prices in New York rose to the highest in more than six months as a jump in energy costs boosted the appeal of the precious metal as an inflation hedge. Gold futures for April delivery rose $9.50, or 1.4 percent, to $672.30 an ounce on the Comex division of the New York Mercantile Exchange. Prices earlier reached $673.90, the highest since July 17. The metal is up 3.2 percent this week."

"Oil reached $60.80 a barrel, the highest since Jan. 3, after Occidental Petroleum Corp. suspended most production at the Elk Hills field in California. Oil is up 16 percent in the past three weeks as freezing weather in most of the U.S. sparked demand for heating fuel."

"Gold also attracted buyers after prices topped $667, said Michael Guido, director of hedge-fund marketing at Societe Generale SA in New York. 'This move is about a technical formation and investor interest,' Guido said. 'Targets are being readjusted to $685 and $700.'"

"Gold has risen in five consecutive weeks after prices tumbled 4.9 percent in the week ending Jan. 5."

"'A lot of funds are jumping in and buying,' said Walter Otstott, a senior commodity broker at Dallas Commodity Co. 'I anticipate a run to $700 before you get any significant degree of profit taking.'"

"Gold's performance in January attracted investors who were tentative, Otstott said. Last month, the metal rebounded above the December highs after falling below the lows. 'It's called an outside reversal month,' Otstott said. 'It gets a lot of people like me who are waiting for gold to prove itself more excited. It changes their attitude and they start to add on more positions.'"

From MarketWatch. "'I think it's market investors realizing that there is a confluence of very bullish news all hitting the gold market at the same time, which will provide for a sustained price rally,' said Neal Ryan, director of econmic research at Blanchard. March silver gained 13 cents to $13.90 an ounce."