Money and Metals

Bloomberg reports on currencies. "The yen dropped the most against the dollar in about a month after a Japanese finance ministry official said foreign-exchange won't be a major topic at this weekend's Group of Seven meeting. Japan's yen also posted the biggest one-day loss since December against the euro after the official, who spoke in Tokyo on condition of anonymity, said the G-7 probably won't have a 'big' debate about currencies when they meet in Essen, Germany, on Feb. 9-10."

"U.S. Treasury Secretary Henry Paulson yesterday signaled he doesn't share European officials' concern over the Japanese exchange rate. 'There is no broad consensus,' said Christian Dupont, a senior currency trader at Societe Generale SA in Montreal. 'An official statement on the yen isn't warranted. This doesn't bode well for the yen. The economic fundamentals in Japan are still weak.'"

"The yen fell to 120.63 per dollar at 4:01 p.m. in New York from 120.10 yesterday. The Japanese currency also declined to 156.96 per euro from 155.94. The yen declined against 15 of 16 most-actively traded currencies tracked by Bloomberg, outperforming only Brazil's real."

"The dollar weakened against the euro after a U.S. government report showed labor costs grew at a smaller-than-forecast 1.7 percent pace last quarter, down from a revised 3.2 percent rate in the prior period. It compared with the median forecast of 2.1 percent in a Bloomberg survey. The dollar fell to $1.3012 per euro from $1.2985 yesterday."

"The euro also gained on speculation European Central Bank President Jean-Claude Trichet will signal an interest-rate increase next month."

"Federal Reserve Bank of Philadelphia President Charles Plosser said the central bank may need to raise its benchmark interest rate as recent stronger economic growth increases the risk that inflation won't moderate."

"'With growth prospects of the economy improving, there is some risk that we may not see a return to price stability unless monetary conditions are further tightened,' Plosser said in a speech today to the Greater Philadelphia Chamber of Commerce."

"Plosser, who took over at the Philadelphia Fed in August and doesn't vote on policy this year, said he's 'not convinced that underlying inflation is on a downward trend.' He said a recent easing of price pressures may be the temporary result of a decline in oil prices, which may rise again."

From MarketWatch. "Gold futures closed lower Wednesday, failing to hold their ground at the $660-an-ounce level as a retreat in oil prices pared the metal's safe-haven appeal."

"'You could revive the old 'gold slips on oil' once again,' said Jon Nadler, an analyst at bullion dealers Kitco.com. 'Crude's failure to capture $60 is about as significant for the time being, as gold being unable to get over $660,' he said."

"Gold for April delivery closed $1.40 lower at $657.30 an ounce on the New York Mercantile Exchange. It's up $5.80 from Friday's closing level, but the contract remains below Thursday's close of $663, which marked its loftiest level in nearly six months."

"'Technical resistance has again caused gold to stall,' said James Moore, an analyst at TheBullionDesk.com. 'But the combination of dollar weakness and energy-led inflation concerns, coupled with strong physical and fund buying paints a very positive picture, suggesting once the selling is satisfied gold will be quick to move higher, and could potentially look to target $676 in a short space of time,' he said."

"Analysts at Action Economics said in a research note that gold has been seen as a hedge against any negative sentiment toward the dollar ahead of a meeting of Group of Seven finance ministers in Germany. In the past, officials at G7 meetings have remarked on the need to address global imbalances, thereby triggering a fall in the U.S. currency."

"Rounding out the action in metals Wednesday, March silver rose 3.5 cents to close at $13.71 an ounce, while April platinum gained $12.70 to end at $1,203 an ounce and March palladium rose $1.15 to close at $345.20 an ounce."