Money and Metals

The Associated Press reports on currencies. "The dollar gave up more ground to the euro, which climbed to within one cent of its all-time high, and the pound neared $2 Monday. Supported by crackling economic growth, falling jobless figures and interest rates much lower than those in Britain and the United States, the 13-nation euro bought $1.3549 by afternoon in Europe after climbing as high as $1.3576, its highest point since January 2005 and near its record of $1.3667 from December 2004."

"Kristian Siggaard-Jensen, a foreign exchange strategist with Saxo Bank in Copenhagen, Denmark, said markets had factored in the increases, noting the steady guidance by the European Central Bank and the Bank of England. 'People have been expecting this sort of volatility...to pick up for some time,' he said."

"The British pound rose to $1.9938, a 14-year high, on unexpectedly higher prices for manufactured goods and news that the sizzling housing market was not cooling off. Analysts said they expected the currency to cross the $2 mark this week. It later fell back to $1.9920, still less than a penny off of $2 barrier. That compared with $1.9870 on Friday in New York."

"'Clearly many are eyeing a test of the key $2 level, something that hasn't been seen since 1992,' said David Jones, chief market analyst for CMC Markets in London."

"The dollar rose to 119.54 Japanese yen from 119.06 yen late Friday after officials from the Group of Seven wealthiest nations did not press Japan to raise its own interest rates to buoy its currency at a weekend meeting."

"'The tenor of European rhetoric at the G-7 was surprising, and on the face of it, positive, as it's always good to see a lack of equivocation on the part of central bankers,' Siggaard-Jensen said of last weekend's meeting of G7 officials in Washington."

"'The fundamentals are in line to go higher and the politicians seem to be welcoming that,' Siggaard-Jensen said. 'The investors are more confident, too, and realize 'We can take euro/dollar above the all-time highs without getting too much (government) intervention.'"

"Worries about the U.S. trade and budget deficits were a key factor in the euro's surge to its all-time high in 2004, but those worries were submerged over the past two years by the Federal Reserve's campaign of interest rate increases. The Fed has left rates unchanged over recent months, with markets watching U.S. data closely for pointers as to the Fed's course."

From AFX News. "The swiss franc meanwhile, which strengthened earlier following comments from Swiss National Bank chairman Jean-Pierre Roth, fell back as it is also a widely used currency in carry trades. Roth said the SNB has to be vigilant 'as the weak swiss franc and falling unemployment could pose a risk to price stability.'"

From MarketWatch. "Gold futures finished near $695 an ounce Monday to mark their strongest closing level since late February, finding support from strength in oil prices as well as some weakness in the U.S. dollar."

"'Gold continues to benefit from a declining U.S. dollar strong physical and investment demand, and the inability to cap its price for any real length of time by the shorts,' said Peter Grandich, editor of the Grandich Letter.
'While $700 is a psychological resistance level, the next real battle will be around the old highs from last year in the $735 area,' he said."

"Gold for June delivery closed up 0.7%, or $4.60, at $694.50 an ounce on the New York Mercantile Exchange, its highest close since Feb. 26. The contract had touched $695 during the session, its strongest intraday level since Feb. 27. The metal closed last week with a gain of 1.5%."

"'While the bullish trend remains intact, some traders feel that there may be a period of consolidation before gold prices manage to break the psychologically important $700 mark,' according to Action Economics."

"In the backdrop, May crude held their ground above $63 a barrel, nearly recovering from a low of $62.58 on the heels of uncertainty related to the elections in Nigeria."

"Elsewhere in metals trading, silver prices posted a modest decline, with the May contract down 1 cent to close at $14.08 an ounce. It traded as high as $14.13 during the session."

"'The $14 level is a point of resistance, so it will slow the silver price, but once solidly over that hurdle, $15 looks a small climb,' said Julian Phillips, an analyst at GoldForecaster.com."

"Rounding out the metals action, June palladium fell $2.05 to end at $379 an ounce while July platinum rose $3.10 to finish at $1,289.50 an ounce."