Tuesday, May 08, 2007


Markets Hesitate Ahead Of Rate Moves

The Associated Press reports on currencies. "The dollar rose against the euro Tuesday after German industrial production fell more than expected in March. The 13-nation euro was quoted at $1.3545 in late New York trading, down from $1.3603 Monday and well off last month's all-time high of $1.3682."

"The euro dropped after the German Economy Ministry reported industrial production in the country fell 0.1 percent in March, compared with a 0.4 percent gain the month before. Analysts had expected the figure would remain unchanged."

"The British pound fell to $1.9889 from $1.9931 late Monday, and the Japanese yen slid to 119.95 from 120.11. In other trading, the dollar bought 1.2172 Swiss francs, up from 1.2115 late Monday, and 1.1048 Canadian dollars, rising from 1.1020."

"The drops came as central banks in Europe, Britain and the United States are set to meet this week."

From Bloomberg. "New Zealand's dollar may strengthen on speculation the interest-rate gap with the U.S. will remain unchanged, luring investors to the nation's higher-yielding assets. The local dollar bought 73.73 U.S. cents at 9:12 a.m. in Wellington, from 73.82 cents in late Asian trading yesterday."

"New Zealand's currency fell yesterday after investors trimmed their investments in the carry trade, said Danica Hampton, currency strategist at Bank of New Zealand Ltd. in Wellington. The New Zealand currency traded at 88.44 yen, from 88.47 yen late in Asia yesterday. The carry trade has helped the local currency gain 27 percent against the yen the past year."

"'The market tends to interpret Federal Reserve comments as quite dovish and hasn't fully discounted the risk of rate cuts,' said Meg Browne, currency strategist at Brown Brothers Harriman & Co. in New York. 'We'll probably see some strength in the kiwi on anticipation of that U.S. dollar weakness.'"

From Reuters. "A stronger dollar against the euro and follow-through sales from the previous session sent gold futures to a lower finish on Tuesday, as investors held their bets ahead of interest-rate decisions from major central banks this week."

"Most-active gold for June delivery on the COMEX division of the New York Mercantile Exchange settled down $3.00 at $687.40 an ounce, traded in a range of $684.10 to $691.30."

"The euro slid against the dollar on technical chart-based selling. A stronger greenback makes dollar-denominated assets like gold more expensive for investors holding other currencies. Bart Melek, global commodity strategist at BMO Capital Markets, said in a note that gold stayed relatively firm after easing in early morning trade as investors positioned ahead of the Federal Open Market Committee rate-setting announcement on Wednesday."

"Melek said he expected selling pressure in the dollar and global inflation concerns should lift gold 'materially' above $700 an ounce later in the year."

"With the Federal Reserve, European Central Bank and Bank of England all setting interest rates this week, precious metals investors were unwilling to add to their current positions."

"Investors will take their cues from the rate-setting decisions, which often affect gold prices because of interactions in the currency markets."

"Spot gold was quoted at $684.30/5.80 an ounce, below a late quote of $688.90/9.40 in New York on Monday. The London afternoon gold fix was set at $684.25 an ounce."

"COMEX July silver finished down 4.0 cents at $13.600 an ounce, traded from $13.405 to $13.665. Spot silver was quoted at $13.48/3.51 versus $13.51/3.54, its previous finish late Monday in New York. Silver fix was set at $13.48 an ounce in London."

"Platinum futures fell on Tuesday after they hit a life-of-contract high on Monday due to strong buying in the Asia markets. July platinum ended down $7.70 at $1,343.20 an ounce. Spot platinum fetched $1,333.00/1,338.00."

"June palladium dropped $3.25 to close at $375.95 an ounce. Spot palladium was quoted at $370.00/374.00."

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