Wednesday, April 25, 2007


US$ Near All-Time Lows

Reuters reports on currencies. "The dollar fell on Wednesday to a record low against a trade-weighted basket of major currencies tracked by the Federal Reserve, reflecting prospects for slower growth in the U.S. economy. The index has dropped to the 79.20 area only two other times in the 34-year history of the gauge, once in April 1995 during a period of U.S. trade frictions with Japan and again in December 2004 when financial market concerns about the U.S. trade deficit reached a peak."

The Associated Press. "The dollar traded within a whisker Wednesday of an all-time low against the euro, which passed $1.3660 on rising business confidence in Germany and disappointing sales of new homes in the U.S."

"The euro, which peaked at $1.3667 in December 2004, climbed to $1.3664 in late afternoon European trading after the release of Germany's closely watched Ifo business confidence index. The euro bought $1.3626 late Tuesday in New York."

"The euro fell back to $1.3640 after the U.S. Commerce Department reported that sales of new homes rebounded slightly in March, but not enough to offset declines in January and February."

"Meanwhile, the pound rose as high as $2.0062, climbing from $2.0000 late Tuesday, after data showed the British economy defied expectations of a slowdown in the first quarter and expanded 2.8 percent from a year earlier."

"The British currency rose in late New York trading to $2.0020. It broke through $2 last week for the first time in nearly 15 years."

"The dollar barely budged against Japan's currency, edging up to 118.69 yen from 118.68 yen. It bought 1.2047 Swiss francs, up from 1.2028 Tuesday, and 1.1150 Canadian dollars, down from 1.1228."

"Gold prices held firm on Wednesday as weak U.S. housing market data hit dollar sentiment and as crude oil prices rose after news of falling gasoline stocks in the United States. Spot gold was up at $685.25/685.75 an ounce at 1500 GMT compared with $684.10/684.60 late in New York on Tuesday, when it hit a session low around $680."

"'The dollar has been the main thing behind gold's move this afternoon, and U.S. gasoline stocks fell,' a London-based trader said. 'If the dollar falls to new record lows, we could see gold trying the $690 level again.'"

"'Physical activity is strong in the mornings and has offset long liquidation in the afternoons,' said Frederic Panizzutti, analyst at MKS Finance. 'Physical demand is likely to remain strong, but the market needs a catalyst to move prices much higher.'"

"Also supportive were comments by a Chinese central bank official, who said the country should put its $1.202 trillion of foreign exchange reserves to better use by ploughing more money into gold, oil and metals."

"Analysts say the new ETFs may boost platinum prices in the longer term. 'If the platinum ETFs take more than about 500,000 ounces...of platinum out of the market then we would expect a material and sustained tightening of platinum forwards and much higher prices,' UBS said in a note."

"Silver gained to $13.83/13.87 an ounce from $13.78/13.81 late in New York on Tuesday and platinum was down at $1,306/1,310 an ounce from $1,315/1,320. Palladium was a touch softer at $378/383 an ounce from $379/384."

PMs should be moving much higher. Someone is capping the price, probably forward selling in the futures market. That is swimming against the tide; gap up should be coming.
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