Friday, March 09, 2007


Jobs Report Boosts Greenback

Bloomberg reports on currencies. "The dollar touched the highest in more than a week against the yen and strengthened versus the euro after a government report showed stronger-than-forecast U.S. job growth, reducing expectations for Federal Reserve rate cuts. The U.S. currency's gain started as a rise in emerging-market assets pushed investors to bet on a drop in the yen, which today is the world's worst-performing currency."

"'The U.S. economy is still growing at a decent pace,' said Mike Moran, senior currency strategist at Standard Chartered Bank. 'The dollar is benefiting from that.'"

"The dollar rose to 118.17 yen at 2:07 p.m. in New York, from 117.18 yesterday. It touched 118.38, the strongest since March 1. It also strengthened to $1.3111 per euro from $1.3133."

"The odds the Fed will cut borrowing costs from 5.25 percent to 5 percent in August fell to 74 percent after the payroll report was released, from 100 percent yesterday, according to interest-rate futures. 'Traders have to take off their bets on Fed rate cuts,' said Jeff Gladstein, global head of foreign-exchange trading at AIG Financial Products. 'The short-dollar positions are under some water.'"

"The Swiss franc, another funding currency for the carry trade, dropped against all most-active currencies except the yen."

"'The payroll report is the first green light to put back on carry trade,' said Paresh Upadhyaya, who helps manage $29 billion in currency assets at Putnam Investments. 'Risk appetite is coming back.'"

From MarketWatch. "Gold futures fell from a one-week high near $660 an ounce Friday as a rise U.S. payrolls met most market expectations and the trade deficit narrowed, boosting the dollar and easing investment demand for precious metals. But after climbing over the last three sessions, gold futures finished the week with a more than 1% gain."

"Early Friday, the market was on its way higher 'but the market perceived economic data as dollar friendly,' said Peter Spina, chief investment strategist at"

"Gold for April delivery closed down $3.50 at $652 an ounce on the New York Mercantile Exchange. The contract had traded as high as $659.80 earlier in the session. It closed at $644.10 last Friday, so it was up $7.90 for the week."

"'I think the fact we have had a $10 jump in oil prices in February compared to January will significantly impact the trade deficit numbers on the negative side moving forward,' said Neal Ryan, director of economic research at Blanchard. The U.S. trade deficit narrowed again in January, adding to the sense that the trade gap has at least stabilized and may be starting on a downward trend, a government report showed Friday."

"'Technically, gold and silver need to complete their consolidation after the financial tsunami of last week,' said Julian Phillips, an analyst at 'Oil favors gold and the dollar, whilst stronger than earlier this week, is still looking anemic. Gold is still building a foundation, and waiting for triggers to send it higher,' he said."

"'The key to key to gold's performance over the next few weeks is how emerging market equity indices behave ... because the biggest per-capita purchases of gold are made by people in countries like India, China, Malaysia, and in some Middle Eastern countries,' said Steven Jon Kaplan, a senior editor at"

"In the shorter term, however, it appears unlikely that the U.S. Federal Reserve will cut interest rates, he said. That would mean that reduced buying from India, China and elsewhere would not have any positive offset and gold prices will probably fall for the next few months, he said."

"But once the Fed starts to cut rates, this should cause gold prices to rise, he said. Kaplan said the market will likely see the lower price for gold in May or June, possibly about $575 an ounce, 'and then gold will set a new all-time high in 2008 or 2009,' he said."

""May silver shed 15 cents to close at $12.97 an ounce, nearly unchanged from the $12.96 level it closed at a week ago. June palladium rose $3.35 to end at $356.40 an ounce, up 1.7% for the week, but sister metal platinum saw its April contract pull back by $10.80 to close at $1,203.70 an ounce, down 0.7% for the week."

'China will soon create one of the world's largest investment funds, with ramifications for global stock, bond and commodities markets and for how the U.S. finances its trade deficits.'

'Finance Minister Jin Renqing said on Friday the aim is to make more profitable use of its $1 trillion in foreign currency reserves that have piled up as it posted huge trade surpluses year after year. Most of those funds are now parked in safe, but relatively low-yielding U.S. Treasury securities and other dollar-denominated assets.'

'We can achieve more profit from the investments,' Jin said at a news conference. 'We are now preparing the organization of this new corporation.'
Suggested names for the new venture include:

"Fenghi Mae" or "Freddie Mao"

"we can achieve more profit from the investments"

In other words, "We're going to sell our US dollar assets, and reduce the rate at which we buy future dollar assets because we don't see US interest rates going up any time soon, and the risk reward ratio has become too risky".
Ben , I have linked to your site from my blog
I hopes it helps.
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