Money and Metals

Reuters reports on currencies. "The dollar eased against most major currencies and traded near record lows versus the euro on Thursday as concerns about the health of the U.S. housing market and its impact on consumer spending persisted. The dollar reached its lowest levels in years on Wednesday following congressional testimony by Federal Reserve Chairman Ben Bernanke."

"The Fed cut growth forecasts for the U.S. economy for this year and next and Bernanke said the hard-hit housing market will remain sluggish."

"'The market continues on a bearish mode towards the dollar, favoring higher-yielding currencies and Bernanke's testimony today didn't change that outlook,' said Nick Bennenbroek, head currency strategist at Wells Fargo."

"In early afternoon trading in New York, the euro was up 0.1 percent on the day at $1.3812, having hit $1.3834 on Wednesday according to electronic trading system EBS, its strongest level since its launch in 1999."

"The dollar was up 0.2 percent at 122.08 yen, but it briefly pared its gains versus the Japanese currency after a measure of business activity in the Mid-Atlantic region from the Philadelphia Federal Reserve Bank was surprisingly weak."

"'There's a great deal of volatility in this number. But to the extent that it came in weaker than expected is consistent with the lower dollar trend,' said Bob Lynch, head of G10 FX strategy at HSBC Bank USA."

"Sterling was down 0.2 percent at $2.0485 after softer-than-expected UK retail sales data, coming further off a 26-year peak of $2.0548 hit on Wednesday."

"The market currently reckons U.S. rates will have to stay on hold or be cut at some point but analysts expect the Bank of England and the European Central Bank to raise rates in September, which is supporting the pound and the euro."

"'The FX market has warmed to the idea that the Fed's going to be on hold for the rest of the year so it will have to look elsewhere for direction, probably other asset classes. The dollar's movements are very much dependent on how the U.S. corporate bond market trades, at least for the time being,' said Paul Mackel, senior currency strategist at HSBC in London."

"The dollar also was hurt Wednesday by news two Bear Stearns hedge funds exposed to the risky subprime mortgage sector were now virtually worthless. 'The hedge fund news hit the market and the dollar yesterday, but stocks rebounded and they are up again today, which may be tempering some of the dollar's losses,' said Bennebroek at Wells Fargo."

From MarketWatch. "Gold futures climbed more than $4 an ounce Thursday and copper prices rallied nearly 3%, sending the benchmark contracts for both metals to their highest closing levels in more than two months."

"Concerns over high energy prices and overall weakness in the U.S. dollar continued to support gold prices. Gold for August delivery closed $4.40 higher at $678.10 an ounce on the New York Mercantile Exchange, the contract's strongest closing level since May 15. It traded as high as $678.50, its highest intraday level since June 5."

"As for gold, it stayed mostly firm during the session and prices rose 'nicely' late in the session 'amid continued weakness in the U.S. dollar and near 11-month highs in the crude oil price,' Kitco Bullion Dealers analyst Jon Nadler said in a note to clients."

"'Barring any Friday surprises, bullion might close its third week of gains on a more confident note than it has enjoyed really, since late in May,' he said."

"'Gold remains firm and the dollar remains under pressure staying near record lows versus the euro and sterling with Fed Chairman, Ben Bernanke's Congressional testimony yesterday weighing on the currency,' said Mark O'Byrne, director at Gold & Silver Investments Ltd. Bernanke reiterated that 'upside risks to inflation remain the Fed's main concern, [though] markets were more interested in his references to other problems,' said O'Byrne in a research note."

"Meanwhile, crude futures prices closed near $76 a barrel, feeding worries over high energy prices."

"Also on Nymex, September silver gained 8.5 cents to close at $13.375 an ounce, October platinum added $1.30 to end at $1,338.50 an ounce, and September palladium rose $2 to close at $373.95 an ounce."