Monday, April 09, 2007


US$ Recovery "Unconvincing"

MarketWatch reports on currencies. "The dollar hovered near a six-week high against the yen and rose against the euro Monday, as traders played off growth in U.S. nonfarm payrolls for March that was much stronger than expected. The growth in payrolls raised the prospect that the Federal Reserve's next move on interest rates may be a further hike rather than a cut."

"'Thin trading conditions have kept the U.S. dollar in narrow trading ranges, while the stronger-than-expected employment data before the weekend is lending it support,' said Marc Chandler, global head of currency strategy at Brown Brothers Harriman."

"That said, 'the dollar's recovery...has thus far been unconvincing,' he said. 'It could be a function of the lack of participation, even though that very same fact could have produced a more violent reaction.'"

"Late in New York, the dollar was quoted at 119.28 yen, compared with 119.30 yen late Friday. The euro stood at $1.3356, compared with $1.3373. The British pound traded at $1.9615 vs. $1.9650. The dollar changed hands at 1.2262 Swiss francs, compared with 1.2189 francs."

"The Fed's scheduled to release the minutes from its most recent interest-rate meeting on Wednesday. The minutes will give 'some color on the Fed's decision to abandon its outright tightening bias,' said David Watt, senior currency strategist at RBC Capital Markets."

"Another key piece of data for currency traders will be producer prices for March, due for release on Friday at 8:30 a.m. Eastern time. Also on Friday, the Commerce Department releases data on the U.S. trade deficit for February. Economists expect the trade gap to have widened to $60.3 billion from $59.1 billion in January."

"'With few expecting the BoJ to hike this week, carry trades will remain in favour,' Watt said."

"Gold for June delivery ended down $2.50 at $676.90 an ounce on the New York Mercantile Exchange Monday, reversing early-session gains, as falling crude-oil prices and the rising dollar weakened demand for the precious metal."

"With economic data lacking until the latter half of the week, 'gold will have to find its bearing on internal market conditions and show strength or weakness based mainly on the appetite of physical buyers and the gut feelings of speculative institutionals,' said analyst Jon Nadler."

"'Gold's ability to withstand a marked increase in central bank sales recently implies that physical demand is quite strong,' said Peter Grandich, editor of The Grandich Letter. 'In addition, another failed attempt to cap the gold price by the shorts has led to a breakout on the charts.'"

"Other metals prices were mixed. May silver ended down 7 cents at $13.81 an ounce. July platinum fell $1.60 at $1,264.30 an ounce, while June palladium rose $1.60 at $358.0 an ounce."

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