Monday, June 18, 2007


Dollar/Yen Remains A One-Way Ticket

Reuters reports on currencies. "The yen fell to a lifetime low against the euro on Monday and hit a four-and-a-half-year trough against the dollar on a growing view that Japanese interest-rate rises will be outpaced by other central banks. But the dollar edged lower against the euro and sterling, tracking a slide in U.S. government bond yields, which retreated after a rise to five-year highs last week."

"The yen has declined across the board since Bank of Japan governor Toshihiko Fukui last week all but doused expectations that the bank would raise interest rates in July. 'Dollar/yen remains a one-way ticket, euro/yen is setting new highs, and the wide interest rate gap means this will remain a theme throughout the summer,' said Greg Salvaggio, senior currency strategist at Tempus Consulting."

"The dollar hit a fresh four-and-a-half-year high above 123.70 yen for the fourth straight session. Meanwhile, the euro surged to a record high of 165.82 yen and a nine-year high of 1.6664 Swiss francs on electronic trading platform EBS."

"The dollar, however, lost ground against the euro, which rose as high as $1.3419 in tandem with falling U.S. bond yields. Bond prices have edged higher since an unexpectedly tame reading in U.S. core consumer prices on Friday."

"The dollar has rallied since early May, tracking a rise in Treasury bond yields to 5-year highs. Over the past three months a series of solid U.S. economic data has led investors to completely wipe out expectations that the Federal Reserve would deliver at least two quarter-point rate cuts this year."

From MarketWatch. "Gold futures closed higher Monday, building off last week's gains to close near the $660 level as traders eyed movements in the U.S. dollar and continued to gauge inflation concerns and the likelihood of an interest-rate hike by the Federal Reserve."

"Gold for August delivery climbed $1.20 to close at $659.90 an ounce on the New York Mercantile Exchange, marking its strongest closing level since June 7. The benchmark contract, which climbed as high as $662.50 during Monday's trading session, rose $2.80 an ounce last Friday to score a total gain of $8.40 for the week."

"'The precious complex staged a modest rebound Friday as tame CPI data curbed expectation for the Fed to hike interest rates, leading the dollar to give back some of its recent gains,' said James Moore, an analyst at"

"'Range trading appears to be taking over and with no impact news coming our way for some time, gold may meander from $650 to $660 on a short-term basis,' said Jon Nadler, an analyst at Kitco Bullion Dealers. 'Retail investor apathy continues to be a feature, as many are uncertain the worst is over, and the upside targets are not only fairly firm but quite visible above current levels.'"

"'The $665 point may emerge as a decision-making trigger for either side of the participating trading crowd,' he said."

"For now, it's a 'relatively quiet week in terms of U.S. economic data, leaving key housing statistics as the main focus of attention,' said Mark O'Byrne, director at Gold & Silver Investments Ltd. 'The continuing irrational exuberance and huge complacency in financial markets will be challenged by the data, which is expected to be poor,' he said."

"The outlook for U.S. home building is the worst in 16 years, the National Association of Home Builders reported Monday. The builders' housing index fell by 2 points to 28 points in June. The Commerce Department will release its latest report on May housing starts and building permits on Tuesday."

"Meanwhile, a rally in crude prices, and therefore concerns about high energy prices, likely contributed to gold's strength Monday. The benchmark crude contract climbed past $69 a barrel to a level it hasn't seen since September."

"Rounding out the metals action, July silver fell by 2.5 cents to close at $13.235 an ounce, falling from a high of $13.39. But September palladium rose $1.50 to end at $375 an ounce and July platinum added $13.50, or 1.1%, to close at $1,299.50 an ounce."

"'One of the largest platinum mines based in South Africa has gone offline for a week due to some safety concerns and mining union, NUM, and Implats continue to head toward a stalemate in negotiations as Implats has not offered a new wage increase,' according to Neal Ryan, director of economic research at Blanchard & Co. 'NUM filed for a grievance with the government, the next move in beginning an official strike.'"

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