Money and Metals

MarketWatch reports on currencies. "The dollar touched a fresh record low against the euro and dropped against other major currencies Friday, after a government report showed retail sales fell much more than forecast last month, heightening concerns over the state of the U.S. economy. The dollar finished the week down over 1% against the euro and the yen on rising speculation the Federal Reserve will cut interest rates."

"The U.S. currency has come under heavy selling pressure since Tuesday after Wall Street's two largest rating agencies signaled that problems in the subprime mortgage market aren't going away and will probably get worse."

"'The 0.9% fall in June retail sales is significantly worse than expected and has sparked new U.S. dollar sales,' said Marc Chandler, global head of currency strategy at Brown Brothers Harriman."

"Late in New York, the euro stood at $1.3788, compared with $1.3781 late Thursday, after touching an intra-session high of $1.3813. The dollar was quoted at 122.03 yen, compared with 122.47 yen."

"The British pound was quoted at $2.0332, compared with $2.0295. It had earlier risen to $2.0365, matching a 26-year high it reached in the previous session. The dollar changed hands at 1.2027 Swiss francs, compared with 1.2038 francs."

"The Dollar Index, which tracks the greenback against a basket of the world's major currencies, hit its lowest level in two-and-a-half years at 80.44."

"With weak demand for durable goods and falling gas prices, U.S. retail sales fell 0.9% in June, the largest decline since August 2005, the Commerce Department said Friday. Revisions to May and April data were also negative on balance.

"The dollar pared some of its losses after a monthly survey released Friday by Reuters and the University of Michigan showed consumer sentiment rebounded in July."

"For the week, the dollar weakened 1.2% against the euro and 1.1% against the yen.
Many currency analysts are looking for a near-term test on the $1.40 level for the euro."

"'The US dollar itself is the single biggest exception to the general resiliency that the global economy is demonstrating, which tends to be under-appreciated by most observers,' Chandler said. 'The most compelling diagnosis of the dollar attributes its ailment to the fact that most market participants, including a strong majority of primary dealers, cannot see the Federal Reserve raising interest rates.'"

"'Until the market is convinced that growth will be sustained in [the second half of the year], the dollar may not find a solid floor,' he said."

"But in the very short-term, Brian Dolan, chief currency strategist at Forex.com, a division of Gain Capital, said the dollar's decline has now reached significant technical support levels. 'I'm looking for the down move to transition into a consolidation at the minimum, with decent potential for a corrective rebound in the dollar,' he said."

From Reuters. "U.S. gold futures retreated by midmorning Friday on profit-taking, but a weakening dollar and firmer oil prices limited losses and traders said the yellow metal should rise further in the near term."

"'Gold will continue to firm up as long as the dollar is weakening the
way it has been,' Carlos Perez-Santalla of Hudson River Futures said from
the COMEX floor."

"At 10:57 a.m. EDT, most-active gold for August delivery on the COMEX division of the New York Mercantile Exchange was down $2.40 at $665.90 an ounce, trading between $664.40 and $669.90."

"Investors opted to lock in profits after this week's rally. August gold on Thursday surged to a peak of $671 which marked the loftiest level since June 7. Gold futures have rallied more than $20 or 3 percent from last Thursday's close of $650.60."

"The US dollar is still on pace for its second-biggest weekly drop of the
year against a basket of major currencies, the dollar index, which
is down more than 1 pct on the week."

"'I think we are going to see $678 next week..because of the weak dollar,' Perez-Santalla said."

"'The combination of weak dollar and oil driven inflationary concerns will continue to work in gold's favor,' said James Moore, an analyst at TheBullionDesk.com. Moore said that spot gold's next resistance level was seen at $675 and the precious metal could challenge $690."

"Spot gold was quoted at $664.30/664.90 an ounce, lower than $667.00/667.80 late Thursday. The London afternoon gold fix was $666.50. COMEX September silver was down 6 cents at $13.120 an ounce, trading between $13.075 and $13.235."

"Spot silver was quoted at $13.02/13.06 an ounce, compared with $13.08/13.13 late Thursday. London silver was fixed at $13.125. NYMEX October platinum fell $5.80 to $1,324.90 an ounce. Spot platinum fetched $1,312/1,316 an ounce."

"September palladium was also down $2.25 at $370.50 an ounce. Spot palladium was quoted at $366/370 an ounce."