Thursday, November 30, 2006


Gold Shoots Past Resistance

The Associated Press reports on the currency markets. "The U.S. dollar fell against other major currencies in late European trading Thursday, dropping to a fresh 14-year low against the British pound. The euro was quoted at $1.3253, up from $1.3156 late Wednesday. Later, in midday trading in New York, the euro fetched $1.3265."

"The British pound was quoted at $1.9635. Earlier, it traded at $1.9580, its strongest showing against the dollar since the so-called 'Black Wednesday' in September 1992, when Britain crashed out of the European Exchange Rate Mechanism."

"London dealers said the dollar was weakened by mixed economic data coming out of the United States and positive developments in Germany, Europe's largest economy. The U.S. Commerce Department said consumer spending increased in October after two lackluster months, but the nation's retailers reported mixed results in November."

"'There are no major resistance levels until we hit $2.00,' said Monica Fan, global head of currency strategy at RBC Capital Markets. The pound has risen 13.5 percent against the dollar this year, outpacing the euro's 11.4 percent gain."

"Other dollar rates in Europe, compared with late Wednesday, included 115.69 Japanese yen, down from 116.31; 1.1983 Swiss francs, down from 1.2090; and 1.1427 Canadian dollars, up from 1.1380. In midday New York trading, the dollar bought 115.55 yen and 1.1967 Swiss francs, while the pound was worth $1.9680."

From CNN Money. "Worries about the slowing U.S. economy sent the dollar down to a 20-month low versus the euro and lifted bonds Thursday. A slew of reports showing the world's largest economy is cooling sparked the slide in the dollar as currency traders worried the Federal Reserve would have to start cutting interest rates to reinvigorate growth."

"The report to incite the most concern was one showing a decline in business activity in the Midwest. The National Association of Purchasing Management-Chicago said its measure of activity fell unexpectedly to 49.9 from 53.5 in October. A measure below 50 indicates contraction."

From MarketWatch. "Gold futures rallied to a 12-week high Thursday to end the month nearly 7% higher as U.S. data renewed expectations that the economy is poised for a growth slowdown, prompting the dollar to touch a 14-year low against the British pound and a 20-month low against the euro."

"Gold for December delivery closed up $11.40 at $646.90 an ounce on the New York Mercantile Exchange. It touched $648, its best level since Sept. 5, after losing more than $5 in the past two sessions. The benchmark contract tallied a gain of $40.10, or 6.6%, from the month-ago closing level of $606.80."

"'Unlike previous times, gold has not sold off after hitting key resistance around $640,' said Peter Grandich. 'This suggests a powerful move up is near and a run to $700 is likely.'"

"Meanwhile, oil prices extended their gains to a high above $63 a barrel following declines in U.S. petroleum supplies last week as well as to forecasts for cold weather across much of the nation. 'The threat of oil-driven inflation and bearish sentiment toward the dollar will continue to draw investors towards gold and its unique properties as a store of value,' said James Moore, analyst at TheBullionDesk in London."

"Other metals joined in gold's rally. December silver futures closed up 35.9 cents at $13.925 an ounce, ending 13.5% above the close on Oct. 31. March silver finished up 35.5 cents at $14.115, on higher trading volume."

"January platinum rose $24.30 to end at $1,176.70 an ounce, up 7.7% for the month. December palladium added $7.05 to close at $329.35 an ounce, up 2% from a month ago. March palladium added $6.85 to close at $334.35, on higher trading volume."

Wednesday, November 29, 2006


Late US$ Move Knocks Gold, Silver

Bloomberg reports on the US dollar. "The dollar advanced the most in three weeks against the euro after a government report showed U.S. economic growth last quarter was quicker than previously estimated. The U.S. currency rebounded from a 20-month low it sank to earlier today as evidence of economic strength may persuade the Federal Reserve to keep interest rates on hold for a longer stretch."

"Today's report 'gives some investors an excuse to pare their short dollar positions,' meaning bets on dollar losses, said Christian Dupont, a senior currency trader at Societe Generale SA in Montreal. 'It is definitely too early to talk about a rate cut now.'"

"The U.S. currency advanced to $1.3147 per euro at 11:44 a.m. in New York, from $1.32 yesterday, snapping a six-day slide. Its 0.4 percent gain was the biggest since Nov. 3. The dollar weakened to $1.3218 earlier today, its lowest since March 2005. It traded at 116.23 yen from 116.17 yesterday."

"'Yesterday and today the U.S. dollar was in a position where it was broadly oversold,' said Max Tessier, at CIBC Global Asset Management, which manages $2 billion in currency assets."

"Canada's dollar fell as a government report showed factory prices and raw material costs declined a third straight month and traders expressed concern the country's trade surplus will resume shrinking."

"The currency declined against all 16 major currencies after Statistics Canada said the price of raw materials in October fell 2.8 percent, more than the 1.5 percent economists had forecast. 'There was a push early in the morning that sent the U.S. dollar stronger while Canada weakened,' said Eric Lascelles, senior strategist at TD Securities in Toronto. 'That can be attributed in large part to the economic data that came out.'"

"The Canadian dollar dropped to 87.92 U.S. cents at 3:10 p.m. in New York from 88.45 cents late yesterday."

" A separate report from the U.S. Commerce Department showed sales of new homes in the U.S. declined more than economists forecast, by 3.2 percent in October, to an annual rate of 1.004 million. The report added to evidence that the U.S. housing slump has not ended."

"'It doesn't bode well for Canada, given that Canada is joined at the hip with the U.S.,' said David Mozina, a senior currency strategist at Lehman Brothers."

The Associated Press. "Gold prices slipped Wednesday, as traders took more profits from rises earlier in the week. However, the dollar was probing higher as gold was about to close Wednesday, said Jim Quinn, commodity floor analyst with A.G. Edwards. Just before gold's close, the euro hit a low for the day of $1.3133 after reaching as high as $1.3217 earlier. Thus, said Quinn, gold went from being 50 cents lower to roughly $2 lower just ahead of the final bell."

"'The very late move in the dollar prompted a little bit of selling,' he said. 'The market impacted the most was silver, because silver had put in a pretty good session all day. You had some profit-taking come into the market.'"

"February gold settled down $1.90 to $641.80 a troy ounce on the New York Mercantile Exchange. March silver settled down 5.2 cents to $13.76 an ounce. January platinum settled up $1.80 at $1,152.40 an ounce. March palladium fell $1.15 to $327.50 an ounce."

From MarketWatch. "'Gold has again stalled at the $640 technical resistance remains, but with the FX market overlooking Bernanke's relatively positive speech last night and oil prices starting to work higher as winter demand picks up, the outlook for gold remains positive with $650 being the metals target once the $640-$642 congestion is cleared,' said James Moore, analyst at TheBullionDesk in London."

"There's also renewed speculation about central banks buying gold after comments from the former deputy governor of the Reserve Bank of India, saying that country should increase its exposure to gold within its reserve holdings, according to Moore."

Tuesday, November 28, 2006


Talk Alone Not Enough To Help US$

The Associated Press reports on currency markets. "The dollar fell to a new 20-month low against the euro Tuesday, as a spate of disappointing U.S. economic data further dimmed the prospect of higher interest rates. The 12-nation euro rose as high as $1.3203 - its highest point since March 2005, in midday New York trading, up from $1.3128 late Monday. In later afternoon trading, the euro traded at $1.3177."

"'We have a marketplace that has been somewhat concerned about a narrowing yield advantage,' said Lisa Finstrom, senior futures analyst at Smith Barney. She noted that Asia and Europe are anticipating ongoing economic recovery, 'which will likely be met with higher interest rates.'"

"By afternoon trading Tuesday, the British pound rose to $1.9500 from $1.9371 late Monday. The dollar was steady at 116.08 Japanese yen, the same as late Monday in New York. The euro, created in 1999, is about 5 cents away from its all-time high of $1.3667, reached in December 2004."

From Bloomberg. "'The economy in the euro zone will persistently outperform that in the U.S., which will give the euro more upside,' said Shaun Osborne, chief currency strategist at TD Securities Inc. in Toronto."

"The dollar briefly pared some of its losses versus the euro after Fed Chairman Ben S. Bernanke said inflation risks are 'to the upside.' He also said 'economic growth will be modestly below trend in the near term.' Federal Reserve Bank of Philadelphia President Charles Plosser said today interest rates may not be high enough to slow inflation to an acceptable level."

"'They are balanced with some slight hawkish overtones,' said Steven Butler, director of foreign exchange trading at Scotia Capital Inc. in Toronto. 'But the market knows the Fed is on hold. No matter what the overtones are, I think the next move from the Fed is a cut. The talk isn't enough to help the dollar alone.'"

From MarketWatch. "After a precipitous slide in the last week that caught many traders off guard, the dollar is vulnerable to further losses and may continue to weaken against major rivals heading into 2007, analysts said Tuesday. 'Sentiment for the dollar has been deteriorating steadily over recent weeks,' said Mitul Kotecha, head of global foreign-exchange strategy at French bank Calyon. The decline was not prompted by a particular piece of news or data release, 'but rather a general worsening in sentiment that saw long held technical levels breached,' he said."

"'We expect the dollar to weaken further into year end, and retain this tone in the early months of 2007,' he said."

"'The next major objective you have to look for is the record high in the euro versus the dollar' at above the $1.36 reached at the end of 2004, said David Gilmore, a partner at Foreign Exchange Analytics. 'It's reasonable to look for that in the next couple of quarters.'"

"The Chinese yuan fell against the U.S. dollar, and investors cashed in on recent gains. One dollar was trading for about 7.84 Chinese yuan Tuesday. The declines followed a sell-off on the Chinese markets, which analyst Yu Yang of Guotai Junan Securities earlier Tuesday attributed to profit taking."

"Gold fell more than one percent on Tuesday from 15-week highs scored the previous day as investors took profits ahead of the release of key U.S. data, dealers said. Platinum slipped to a three-week low before rebounding, while silver and palladium were little changed."

"'Unless the dollar starts to weaken significantly again, the market does seem to have done enough for the time being,' said Simon Weeks, director of precious metals at ScotiaMocatta. If gold failed to get back above $640-$642, prices might drop to around $630, the level in the middle of last week when U.S. traders left the market ahead of the Thanksgiving holiday, he said."

"Spot gold hit a high of $641.70 an ounce before falling to $632.80/633.45 by 1528 GMT, against $640.60/641.60 in New York late on Monday. Profit-taking might persist, but prices were unlikely to drop sharply in the coming days, dealers said."

"In other metals, platinum dropped as low as $1,130 an ounce before rising to $1,155/1,165, compared with $1,140/1,150 in the U.S. market. Prices have fallen 19 percent since touching a record high of $1,395 last week."

"Silver edged down to $13.42/13.49 an ounce from $13.46/13.53, while palladium was down $1 at $322/327."

Monday, November 27, 2006


"Shifting Of Assets Keep US$ Weak"

The Associated Press reports on the US dollar. "The dollar weakened to a new 20-month low against the euro Monday, as traders bet the gap between European and U.S. interest rates will keep narrowing. The possibility of China reducing its dollar holdings also caused the U.S. currency to drop."

"The euro bought $1.3128 in late trading in New York, up from $1.3079 late Friday. Earlier Monday, the euro reached $1.3172, its highest point since March 2005. The euro crossed the key $1.30 mark late last week, when many traders were off for the Thanksgiving holiday. Light volumes often cause market volatility. Still, even as U.S. traders re-entered the currency markets on Monday, the dollar held at low levels."

"'The naysayers are suggesting the move occurred only because of low liquidity. But we're still here. The move is real, it has some strength to it," said David Durrant, chief strategist at Julius Baer Investment Management. 'The dollar bears are going, 'I told you so,' and the dollar bulls are standing there in disbelief.'"

"'What's undermining the dollar is that U.S. economic data has been soft, and European data has been stronger than expected,' said Michael Woolfolk, senior currency strategist at Bank of New York. 'The pendulum is swinging back towards a Fed rate cut.'"

"According to market watchers, China isn't the only country looking to reduce dollar holdings. 'We've heard out of China, Russia, Sweden, and other central banks the desire to hold smaller proportion of reserves in U.S. dollars,' Woolfolk said."

"On Monday, the People's Bank of China set its currency's rate at 7.8402 yuan per dollar, the strongest level since the current exchange system was set up in July 2005. Against the Japanese currency, the dollar fell as low as 115.40 yen on Monday _ its lowest point since August. It then recovered to 116.08 yen by late trading, up from 115.78 yen late Friday in New York."

"The dollar fell to 1.2067 Swiss francs from 1.2105, and to 1.1324 Canadian dollars from 1.1331."

From Reuters. "Eurogroup Chairman Jean-Claude Juncker said on Monday he was not concerned by the current level of the euro and that a critical point was 'lengths away.'"

"Investors are also gearing for U.S. economic data scheduled for release later in the week, analysts said. 'If there is any sign of an across the board (economic) softening we could see the dollar get hammered again,' said Ron Simpson, director of currency research at Action Economics in Tampa, Florida."

From MarketWatch. "Gold futures closed higher Monday, gaining more than $11 an ounce as the dollar continued lower against most of its major foreign-exchange rivals on concerns about the outlook for U.S. growth. Gold for December delivery closed up $11.60 at $640.60 an ounce on the New York Mercantile Exchange after reaching a high of $641.60."

"'Should gold overcome the $642 barrier and close consistently above it in coming days could well be the signal that brings it back to $680 (or higher) before December draws to a close,' said Kitco's Jon Nadler. 'To be sure, there will be lots of news and retrospective year-end jockeying on behalf of the greenback,' he said."

"Other metals were also higher Monday, with December silver futures gaining 45 cents to $13.49 an ounce. In addition, January platinum fell $6.60 to $1,147.40 an ounce, surrendering early gains and continuing the volatile trend seen last week. Sister metal palladium saw its December contract fall by $1 to $325 an ounce."

From Fortune. "Traders said they expected gold to continue to move in a narrow range, as investors await Federal Reserve Chairman Ben Bernanke's comments about the economic outlook Tuesday and the U.S. gross domestic product data on Wednesday."

"'People felt confident to buy gold during the unexpected weakness from Wednesday to the present on the dollar. It was just straightly a shifting of assets. There is very little else to say,' said George Nickas, a futures broker at FC Stone."

"U.S. crude, meanwhile, was trading above $60 on Monday after Saudi Arabia's oil minister said OPEC might cut output further at its Dec. 14 meeting."


US$ Off To Weak Start

Bloomberg reports on the overnight US dollar trade. "South Africa's rand rose to its highest in almost three months as the price of gold, the country's single largest export, advanced. The currency also added to its 1.6 percent gain last week amid speculation reports will show the U.S. economy is slowing, making it less likely the Federal Reserve will increase rates."

"'We've seen the gold price spike up as the dollar has fallen,' said Kimon Boyiatjis, who heads Trident Capital, a Cape Town-based hedge fund with about $400 million in assets. 'There's definitely a strong correlation between the currency and precious metals.'"

"Against the dollar, the rand rose as much as 1.4 percent to 7.07, the highest since Aug. 31, and was trading at 7.11 at 9:43 a.m. in Johannesburg. It has advanced 1.7 percent in the past seven days, cutting its losses for the year to 11 percent, still the worst performance of the 71 currencies tracked by Bloomberg."

"Gold for immediate delivery rose as much as $3.40, or 0.5 percent, to $642.15 an ounce, the highest since Aug. 11, and was trading at $640.40 at 7:31 a.m. in London."

From China Daily. "The value of the Renminbi against the US dollar hit a new high on Monday, with the central parity rate at 7.8402 yuan to one dollar, breaking the 7.85 mark."

"This signifies that RMB value has risen by 5.31 percent since July 21, 2005, when the Chinese government launched the reform of the exchange rate system to allow the yuan to float against the U.S. dollar within a daily 0.3 percent band from the official central parity rate."

"The appreciation followed previous records on November 9 when the central parity rate hit 7.8697, breaking the 7.87 mark, and November 23 when it was 7.8596, breaking the 7.86 mark. The exchange rate was set at about 8.27 yuan per US dollar before the reform."

"US critics have argued that China's currency is undervalued by as much as 40 percent, giving Chinese goods price advantages and resulting in a mounting trade deficit for the United States, which has exacerbated the pressure to appreciate the yuan."

Friday, November 24, 2006


US$ "Taking It On The Nose"

The Associated Press reports on the US dollar. "The dollar dropped against other major currencies Friday and fell to a year-and-a-half low against the euro, weakened by expectations of higher European interest rates. In late afternoon New York trading, the 12-nation euro bought $1.3079, up from $1.2941 late Thursday in New York. The euro hasn't traded above $1.30 since April 2005 and it briefly topped $1.31 in trading before easing back."

"The dollar slipped against the Japanese currency, falling to 115.75 yen from 116.26 the day before, while the British pound rose to $1.9317 from $1.9156."

The euro was aided by a report which showed that business confidence rose unexpectedly for a second month in a row to a 15-year high. Thursday's Thanksgiving Day holiday may have made markets more volatile by keeping trading volumes relatively light. Many U.S. dealers also took Friday off as part of a long holiday weekend."

"The Ifo report firmed up expectations that the European Central Bank will continue to raise interest rates, with the next increase forecast for December. In contrast, many believe that the Federal Reserve will keep rates on hold or cut them next year."

"The ECB has raised rates five times since last year to 3.25 percent, while the Fed has left its rate at 5.25 percent for three months after 17 hikes since June 2004."

"In other trading, the dollar bought 1.2105 Swiss francs, down from 1.2246 late Thursday, and 1.1331 Canadian dollars, down from 1.1419."

"Analysts said that the dollar's fall was spurred by increasing worries that the interest-rate differential between the U.S. and other parts of the world will narrow soon."

"The concerns come from a mix of developments, including speculation that the U.S. central bank may lower interest rates earlier than expected, as well as comments from China warning about the risk to Asian currency reserves from further dollar declines."

"Gold futures rallied Friday as the dollar tumbled to a 1 1/2-year low against the euro and an almost two-year low against the British pound on concerns about flagging economic growth in the U.S. Platinum continued its trend of extreme volatility, rising $34 in the Friday session alone."

"With the stock market closed at 1 p.m. Eastern, gold for December delivery was up $9.60 at $638.60 an ounce in electronic trading. The New York Mercantile Exchange is closed for trading Friday, leaving the electronic Chicago Board of Trade contract as only way to trade the precious metal. It's the first time the CBOT contract has been open while Nymex is closed."

"'The dollar is taking it on the nose as slow holiday trade in the U.S. is also helping to push gold much higher,' said Kevin Kerr, a trader and editor. 'Gold seems to be building a consensus of buyers at this level and many bullish factors are at work -- the bearish turn for the dollar seems to be even more juice for the gold price,' he said."

"Silver futures were up 43 cents at $13.47 an ounce. Platinum recovered from a steep sell-off Wednesday to trade up $34 at $1,188 an ounce. Palladium was up $4.95 at $330.95 an ounce."

Wednesday, November 22, 2006


US$ Falls On "General Pessimism"

Bloomberg reports on the US dollar. "The dollar fell to a five-month low versus the euro and tumbled against the yen as a report showing an increase in jobless claims suggested the economy is cooling. Dollar losses accelerated as a government report showed more workers filing for unemployment benefits during the past week."

"'There is a general pessimism on the dollar right now,' said Samarjit Shankar, director of global strategy for the foreign exchange group in Boston at Mellon Financial Corp. 'People are now concerned that the growth outlook heading into next year is on the down side.'"

"The dollar declined to $1.2929 per euro at 12:31 p.m. in New York, from $1.2844 yesterday. The U.S. currency reached an intraday low of $1.2957, the lowest since June 5 when it touched $1.2979. The dollar dropped to 116.63 yen, from 117.92."

"The yen gained against all 16 of the world's major currencies as investors bought back low-yielding currencies used to fund investments elsewhere, a practice known as the carry trade. The U.S. currency fell against 14 of 16 major currencies after economic advisers to President Bush yesterday cut their forecasts for growth next year."

"Popular carry trades this year have included selling the yen to finance investments in the Australian dollar, euro and British pound, and selling the Swiss franc to invest in the euro and the pound, Upadhyaya said. The yen and the franc are popular as so-called funding currencies because of the low interest rates in Japan and Switzerland."

The Daily FX. "The US dollar found itself defenseless ahead of the long holiday weekend, as traders pounced on the opportunity to send it significantly lower against its foreign counterparts. Experts cited a cascade of stop loss orders as the primary driver for the surprising move, with unchanged fundamentals providing little underlying cause for such a breathtaking dollar drop. Leading the barrage, the Swiss Franc was the top gainer with a 1.1 percent appreciation against the Greenback."

From MarketWatch. "Gold futures rose Wednesday but closed well below the day's peak, and silver prices retreated from their highest level in more than two months as the metals took their cue from platinum futures, which sank more than 5%. Speculation about the possible launch of a platinum-based exchange-traded fund continued to evaporate after Barclays, the bank behind the silver ETF, said it has no such plan."

"December gold futures rose 30 cents to close at $629 an ounce on the New York Mercantile Exchange. That was the contract's highest closing level since Nov. 10, but prices had traded as high as $635 earlier in the session. December silver shed 4.5 cents to close at $13.04 an ounce, but not before touching a high of $13.25, a level it hasn't seen since Sept. 6."

"Regular trading on the exchange will be closed on Thursday and Friday for the Thanksgiving holiday."

"Meanwhile, platinum for January delivery closed down $65.10 at $1,154 an ounce, after earlier falling to a low of $1,145. On Tuesday, the contract closed with a loss of more than $15 as doubts about an ETF began to surface. Platinum's sister metal palladium saw its December contract fall $2.35 to end at $326 an ounce."

"Spot prices had vaulted to an all-time high above $1,400 early in the session as the speculation hit its peak. 'The rumors about the platinum ETF have sparked interest in the ultra precious metal, but no definitive proof of such an ETF is apparent,' said Kevin Kerr, editor of a newsletter published by MarketWatch."

"'We have not filed for a platinum product and have no immediate plans to do so,' Christine Hudacko, a spokeswoman for Barclays Global Investors said Tuesday."

"Tim Murray, a general manager at metals consultancy Johnson Matthey attributes the 'unprecedented [platinum] volatility over the last 3 days' to 'a liquidity squeeze in Zurich.' 'It appears that a few inexperienced and uneducated speculators wrote ill-advised call options and had to scramble to cover their exposure when the market began to rally,' he said."

"Kerr is optimistic that, on an overall basis, metals are on a firmer footing. 'The metals in general seem to be heading for another run at record prices as central banks and individual investors may be getting ready to dip their toes back in,' he said."

Tuesday, November 21, 2006


Platinum Run-Up A "Bear Squeeze?"

Bloomberg reports on precious metals. "Gold prices in New York rose the most in more than a week as a rally in the cost of crude oil boosted the appeal of the precious metal as a hedge against inflation. 'Crude is up today, and that'll help support gold and let this market do what it needs to do,' Nick Ruggiero, a trader at Eagle Futures Inc. in New York. 'There's good buying, and the market is still bullish.'"

"Gold futures for December delivery rose $6.60, or 1.1 percent, to $628.70 an ounce on the Comex division of the New York Mercantile Exchange, the biggest gain since Nov. 9. Prices were little changed yesterday."

"Crude oil rose above $60 a barrel after the Trans-Alaska Pipeline System limited the amount of oil it will carry as high winds disrupted loadings at the Alaskan port of Valdez, and a North Sea platform was shut because of a gas leak. Gold also gained after platinum touched a record high in London, boosting the metal's appeal as a cheaper alternative for jewelers."

"Platinum rose to $1,402.50 an ounce today in London on speculation a new investment fund for the metal will put a squeeze on supply. 'With Chinese jewelers unable or unwilling to buy platinum ahead of the Chinese New Year, it will prompt a switch to other precious metals,' Robin Bhar, an analyst at UBS AG in London, said."

From MarketWatch. "Platinum futures closed with a more than $15-an-ounce loss Tuesday, staging a complete reversal from their highest level in two months as doubts over recent speculation about the launch of a platinum-based exchange traded fund emerged."

"For traders to just run up prices for platinum 'wildly on something that hasn't even been filed for is a bit premature,' said Jon Nadler, an investment-products analyst at bullion dealers'

"Feeding doubts over the potential launch of the investment vehicle, J.P. Morgan analyst Steve Shepherd pointed out in a note to clients Tuesday that Barclays Global Investors, the company that launched the first silver ETF, has said a platinum ETF is under consideration but has stressed that at present, there have been no filings with the Securities and Exchange Commission and none is planned."

"Spot prices for platinum had vaulted to an all-time high Tuesday, topping $1,400 on speculation of an ETF launch, according to Nadler. The gains in platinum helped lift gold and silver futures to three-session highs. Prices for the two precious metals still closed near the session's highest levels."

"Platinum for January delivery finished down $15.20, or 1.2%, at $1,219.10 an ounce on the New York Mercantile Exchange, retreating from a peak of $1,285, the contract's loftiest level since early September."

"On Monday, the contract gained $42 an ounce. The $140 to $160 rise and fall in spot platinum prices within the same day offers a 'clue about the cumulative power of fund money being first thrown at, then removed, from the tiny little market that platinum is, in terms of total value,' said Nadler."

"'To us, it looks like a classic bear squeeze. The squeeze is fueled, we think, by a combination of a tight physical market, the one-month lease rate for platinum is 30%, speculation regarding the launch of a platinum ETF, derivatives activity, and underlying all of this, a strong fundamental outlook,' Shepherd said."

"Shepherd believes the platinum market's too illiquid to support an ETF. 'The major platinum producers sell very little metal into the spot market, and above-ground stocks are tiny, so where would the physical metal come from to support an ETF?' he asked."

"Meanwhile, December silver tacked on 34.5 cents, or 2.7%, to close at $13.085 an ounce."

"'Gold has built and tested strong support between $610-$620 and appears ready to challenge key resistance around $640 next week,' said Peter Grandich, editor of the Grandich Letter."

"The yen was little changed, trading near a record low against the euro, as minutes of the Bank of Japan's policy meeting in October stoked speculation it will delay raising interest rates until next year."

"The economy is 'likely to expand moderately' and rates will be 'gradually' pushed higher, according to the minutes, released today. The yen has fallen against 14 of the 16 most- active currencies tracked by Bloomberg since the central bank lifted borrowing costs for the first time in almost six years on July 14, as investors cut bets on a second increase this year."

"'They have no intention to raise interest rates before the end of the year,' said Michael Woolfolk, senior currency strategist at the Bank of New York. 'Consequently, the yen remains under pressure.'"

Monday, November 20, 2006


Platinum Booms On Demand Report

Bloomberg reports on the metals. "Platinum gained the most in more than six years in London on concern demand for the metal used in car catalysts and jewelry may outstrip supply. It was the second-biggest move of any commodity worldwide."

"Platinum for immediate delivery rose 4.9 percent to $1,248 an ounce as of 5:15 p.m. in London. Earlier, it climbed as much as 6.3 percent to $1,264.50. A close at that price would give the metal the biggest one-day gain since May 1, 2000. It traded at a record $1,340 on May 12. Palladium for immediate delivery in London gained $4, or 1.3 percent, to $322.50 an ounce."

"Supplies of the metal also used in electronic devices will rise 5.3 percent to a record 7 million ounces in 2006, Johnson Matthey, the world's largest distributor of platinum group metals, wrote in a report. 'The fundamentals for platinum are very strong, the market is taking a positive signal from the Johnson Matthey report,' James Moore, a precious-metals analyst with, said in a telephone interview today. 'The funds are ramping it up,' Moore said, adding that there was also 'some industrial buying.'"

"On Nov. 3, platinum surged as much as 5.4 percent in London on speculation that an exchange-traded fund linked to the price of the precious metal may be introduced."

"Should a platinum ETF go ahead, this may add 'between 5 and 15 percent,' to the price, said Wolfgang Wrzesniok-Rossbach, head of marketing and sales at Heraeus Metallhandels GmbH in Hanau, Germany, which owns five precious-metal refineries globally."

From MarketWatch. "Gold retreated late in Monday's regular trading session to close lower as strength in the U.S. dollar dulled the precious metal's attraction as a safe-haven investment. The dollar rose against the euro and yen Monday, after a report showed leading economic indicators for September were revised sharply higher."

"Gold had earlier found some support on the back of platinum's gains 'but for the large part has been pretty lackluster, with two-way interest confining the metal to a $5 range between $622 and $627,' said James Moore."

"Gold for December delivery closed down 40 cents at $622.10 an ounce, retreating from an earlier high of $627.50 even. December silver futures shed 6 cents to close at $12.74 an ounce after trading as high as $13 earlier. 'Despite the recent buying interest from speculators and investors, silver is showing signs of running out of steam and needs to clear the $13.15 to $13.25 chart congestion to avoid slipping back toward $12.40,' said Moore."

"And 'with U.S. markets shut for Thanksgiving at the end of the week and only limited economic data from the U.S., range play [for gold] is likely to be the main theme,' he said."

"The dollar's 'fortunes are beginning to exert an influence as the lessening role of the dollar in international trade (as a reserve currency too) portends a crisis as excess U.S. dollars threaten its stability,' said Julian Phillips, analyst at"

"Canada's dollar set a seven-month low as crude oil prices declined and a government report showed wholesale trade in September fell more than economists expected."

"Statistics Canada said wholesale sales fell the most in more than a year. The Canadian dollar tends to follow the price of commodities, which account for about 54 percent of the country's exports and 12 percent of its C$1.09 trillion ($950 billion) economy."

"'It's easy to be bearish' on the Canadian dollar given the performance of commodities, said David Solin, a partner at Foreign Exchange Analytics in Essex, Connecticut. 'Especially at the rate commodity prices have been falling, a lot of people climb on board.'"

"The U.S. dollar has fallen against 15 of the 16 primary currencies tracked by Bloomberg during the third quarter. The Canadian dollar is the only one that has weakened against the U.S. dollar, declining 2.5 percent."

Sunday, November 19, 2006


Survey Favors Golds' Prospects

Bloomberg has this report. "Gold may rebound on speculation the Federal Reserve won't increase interest rates anytime soon, eroding the value of the dollar and boosting the appeal of the precious metal as an alternative investment. Twenty-one of 32 traders, investors and analysts surveyed by Bloomberg from Sydney to Chicago on Nov. 16 and Nov. 17 advised buying gold, which fell 1.2 percent last week to $622.50 an ounce, the first decline in six weeks. Nine respondents said to sell the metal, and two were neutral."

"A U.S. housing slump and the lowest oil prices in 17 months probably will discourage the Fed from changing its overnight lending rate, after two years of increases, analysts said. 'Speculators are putting more money to work in gold,' said Michael Guido, director of hedge-fund marketing at Societe Generale in New York. 'The hedge-fund community thinks the dollar is going to weaken based on a Fed that's on hold.'"

"Gold for December delivery fell $7.60 an ounce last week on the Comex division of the New York Mercantile Exchange. The decrease surprised a majority of analysts who predicted a gain when surveyed Nov. 9 and Nov. 10. The Fed hasn't raised rates since June 29 amid the worst housing slump in 15 years."

"The Fed also may keep overnight loan rates at 5.25 percent because inflation pressure may be easing. The Labor Department said last week that prices paid to producers in October fell 1.6 percent, matching the biggest decline on record, and the consumer price index dropped 0.5 percent in October, following a decrease of 0.5 percent in September."

"'There is no one we can find who is bullish on the dollar,' said Dennis Gartman, a gold trader, economist and editor of the Gartman Letter. 'There is certainly nothing in the CPI report to suggest that the FOMC will err on the side of tighter policies when it meets again next month.'"

"'We believe gold has some real potential to move higher before year end,' said Frederic Panizzutti, senior vice president in Geneva for MKS Finance, one of Switzerland's four gold refiners. 'The dollar remains the prevailing factor.'"

"Analysts say investor demand for gold may rebound after dropping 10 percent in the third quarter to 111 metric tons, the lowest since the second quarter of 2005. Hedge-fund managers and other large speculators increased their net-long position in Comex gold by 9.5 percent in the week ended Nov. 14, the U.S. Commodity Futures Trading Commission in Washington said Nov. 17. Speculative long positions, or bets prices will rise, outnumbered short positions by 88,834 contracts, up 7,668 from a week earlier, the commission said."

"Gold's strength relative to crude oil is reviving speculative demand that helped spur gains in the first half of the year, some traders said. Oil dropped more than 6.3 percent last week, touching $54.86 a barrel, the lowest since June 14."

"Gold 'has held well in the face of a 17-month low in crude oil,' said William O'Neill, a partner at commodity research firm Logic Advisors in Upper Saddle River, New Jersey. 'Long term, we are bullish.'"

"Since mid-May, gold has fallen 15 percent from $732 an ounce, which was the highest price since February 1980. Oil has tumbled 29 percent from a record $78.40 a barrel in mid-July and is down 8.6 percent this year. Any further decline in oil will make gold retreat, some analysts said."

"'If oil continues to slide, it will put a lot of pressure on metals,' said Peter Tse, chief precious-metals dealer at ScotiaMocatta in Hong Kong, the bullion unit of Bank of Nova Scotia. 'If gold hits stops at $615 or even below, we might see a pretty big drop.'"

Friday, November 17, 2006


US$, Gold Turn Ahead Of Holiday Week

Bloomberg reports on currencies. "The dollar snapped a two-day rally against the yen and declined the most in more than a week versus the euro after a government report showed construction of homes tumbled to a six-year low in the U.S. last month."

"The data may raise speculation the slowdown in the housing industry will spill over into the broader economy, pushing the Federal Reserve to cut borrowing costs and dimming the allure of assets denominated in the U.S. currency. Speculation that a hedge fund is selling dollar assets to cover losses added to the decline, traders said."

"The housing data 'raised concern that the housing slowdown will continue to be a drag on growth in the fourth quarter,' said Brian Dolan, research director at a currency trading firm which has about $250 million worth of funds under management. 'This puts the dollar under pressure.'"

"The dollar fell to 117.66 yen at 12:50 p.m. in New York from 118.21 yesterday. The U.S. currency also declined to $1.2823 per euro from $1.2796 yesterday."

"Builders broke ground on an annual rate of 1.486 million new homes, down 14.6 percent from September's revised 1.74 million pace, the Commerce Department said today. 'It's a dollar-negative number,' said Lara Rhame, a New York-based senior currency strategist at Credit Suisse. 'The more important issue is, until we see the Fed move toward a rate cut, you're not going to see the dollar break below recent ranges.'"

"The yen also rallied on speculation the G-20 meeting will include the issue of carry trade by which investors borrow the yen and buy high-yielding assets in the U.S. and other nations. 'The market is taking this as an excuse to pare their dollar long positions,' said Michael Malpede, a senior currency analyst in Chicago at Man Global Research. 'They are concerned that the carry trade may be unwound.'"

From News Australia. "Traders were also closing out positions in anticipation of a quiet week ahead, which will be shortened in the United States because of Thanksgiving Day celebrations on Thursday. 'After a raft of economic indicators, the markets will have little US data to trade on during this holiday-shortened week,' said Calyon analyst Michael Carey."

"The euro came under pressure from comments by French President Jacques Chirac, who said eurozone member states should be allowed more say in the monetary policy of the European Central Bank, two days after Prime Minister Dominique de Villepin said the strong euro was damaging exports."

"The calls by the French leaders reflect anxiety in eurozone countries that the high level of the single currency penalises European companies, making their exports expensive in foreign markets."

From MarketWatch. "Gold futures closed higher Friday for the first time in six sessions, but posted a loss for the week with pressure from easing inflation fears and a steep decline in oil prices partially offset by support from modest weakness in the U.S. dollar."

"The December gold contract closed up 80 cents to close at $622.50 an ounce on the New York Mercantile Exchange after trading as low as $614.50, its weakest intraday level since Nov. 1. December silver shed 14.5 cents to close at $12.80 an ounce, down 2.4% for the week."

"January platinum rose $2.80 to close at $1,192.10 an ounce, marking a complete reversal from a drop earlier to $1,137. It was still down 1.4% for the week.
December palladium fell $4.30 to end at $317.95 an ounce to end the week 3.9% lower."

"'Ahead of a Thanksgiving, weekend trade quieted down, leaving the market ready for a quiet week with little activity expected,' said Julian Phillips, an analyst at 'But with the London market dominant, perhaps the true expression of the physical gold market will be made,' he said. 'Certainly global influences will reign over U.S. ones.'"


Platinum Tumbles

Reuters South Africa reports on precious metals. "Platinum prices declined more than four percent on Friday to a two-week low, as investors took profits from the metal's recent rally to a two-week high, analysts said. Gold inched lower after hovering in a tight $3-an-ounce range, and analysts said prices might slip further on weaker oil prices and a firmer dollar, they added."

"Oil slipped under $56 a barrel to its lowest this year, deepening a $2.50 rout in the previous session driven by fund selling and pressure from high fuel stock levels in the world's leading oil consumer the United States. The dollar gained, making gold costlier for holders of other currencies."

"'With repeated failures to conquer $630 resistance, (we) expect gold to remain sideways with scaled up resistance towards $640,' Standard Bank said in a daily note."

"Investors awaited data on U.S. housing starts in October, due at 1330, for cues on U.S. economy's health."

The Associated Press. "Crude-oil futures hit a new low for the year on Friday, following a tumble the day before, as traders focused on the bearish aspects of conflicting market trends. Vienna-based PVM Oil Associates said Friday that 'high stocks and warmer weather forecasts for the U.S. dragged down all Nymex contracts.'"

"Many analysts still remain bullish in their outlooks, citing concerns about instability in Nigeria and Iraq, a recent drop in U.S. refinery output and trading patterns that suggest the market is preparing for a late-year upswing."

"'Now with OPEC already talking another production cut and the extremely strong demand we should soon pressure the upside of our current trading range,' Phil Flynn, an analyst at Alaron Trading Corp., told Dow Jones Newswires. 'And to break out we will need just one little bullish story to get the complex rolling.'"

Thursday, November 16, 2006


Gold Suffers On More Dollar Strength

Bloomberg reports on the currencies. "The dollar rose against the euro after a report showed manufacturing in the Philadelphia area advanced for the first time in three months and Federal Reserve officials highlighted inflation risks. The data reduced speculation that the Fed will cut borrowing costs early next year, boosting the allure of dollar-denominated assets."

"Fed Bank of St. Louis President William Poole said the U.S. economy is not 'out of the woods' on inflation. Fed Bank of Chicago President Michael Moskow said 'some additional firming' of policy may be needed.'"

"'There are still signs of growth in the U.S. economy,' said David Powell, currency strategist at research firm IDEAglobal in New York. 'The Fed is still concerned about inflation. The market is a little bit ahead of itself to price in a rate cut.'"

"The dollar rose to $1.2795 per euro at 2:56 p.m. in New York from $1.2828 yesterday. The U.S. currency touched an intraday high of $1.2785 after the release of the report. The dollar also strengthened to 118.19 yen from 118.02."

From MarketWatch. "Gold futures fell Thursday to tally a loss of more than $15 during a five-session losing streak as lower energy prices and strength in the U.S. dollar dulled safe-haven demand for the precious metal."

"Gold for December delivery closed down $2.10 at $621.70 an ounce on the New York Mercantile Exchange, retreating from a high of $629. The contract has now lost 2.4%, or $15.10 of its value after falling over five sessions."

"But 'the yellow metal is still struggling to clear $628-$630 short term...a successful breach should see gold target $642-$645,' analyst James Moore said."

"Gold prices were also pressured Thursday by a steep decline in crude-oil futures, which mirrored moves in natural gas. Natural-gas supplies rose last week for the first time in three weeks."

"Other metals closed mixed Thursday. December silver futures closed flat at $12.945 an ounce, January platinum rose $18.50 to close at $1,189.30 an ounce and December palladium added $3.45 to close at $322.25 an ounce."

"The dollar briefly came under pressure overnight after Wu Xiaoling, deputy governor of the People's Bank of China, said that China had been buying yen for its foreign-exchange reserves, but recovered when she went on to say that China had held the yen for years."

"'In an environment of increasing reserve accumulation, diversification of reserves is not zero-sum, the purchases of yen or euros for example, do not necessarily mean dollar sales,' said Marc Chandler, global head of currency strategy at Brown Brothers Harriman."

"The Treasury Department's international capital-flows report released Thursday bear out that argument. The TICs data showed that while net long-term capital inflows into the U.S. fell to $65.1 billion in September from a revised $114.4 billion in August, Chinese holdings of Treasurys rose again in September to $342.1 billion from $339.1 billion in August."

"In fact, the TICs data indicate that 'Chinese investors have been net buyers of U.S. Treasurys every month since last November,' Chandler said."

"Venezuela's currency tumbled to a 2 1/2-year low against the dollar in street trading as a surge in demand for imports outpaced the government's dollar sales."

"The bolivar, which the government sets at an official exchange rate of 2,147.3 bolivars per dollar, sank as much as 1.5 percent today in street trading to 3,145 bolivars. That's the lowest level for the currency since April 13, 2004, when it traded at 3,180 per dollar."

"'There is demand for hard currency that needs to be met right now,' said Antonio Dalbano, a partner with Solfin Sociedad Corretaje de Valores CA in Caracas. 'The country is growing too fast. Dollars are needed.'"

Wednesday, November 15, 2006


US$ Up On 'Optimistic' Fed

Bloomberg reports on the currencies. "The dollar rose against the yen after minutes from the Federal Reserve's rate-setting meeting showed the central bank remains focused on the threat of inflation. The dollar advanced earlier after weaker-than-forecast data from Japan led traders to buy the U.S. currency. A surge in New York manufacturing this month indicated the U.S. economy may be more resilient than investors had speculated."

"'The Fed is downplaying risks to growth and is fixated on inflation concerns,' said Paresh Upadhyaya, who helps manage $29 billion in currency assets at Putnam Investments in Boston. 'This is rather hawkish.'"

"The dollar gained to 118.04 yen at 3:30 p.m. in New York, from 117.62 yesterday. The U.S. currency traded at $1.2826 per euro from $1.2810 late yesterday. The dollar rose to $1.8892 per British pound from $1.8955 late yesterday."

"'Most members judged that the downside risks to economic activity had diminished a little,' the Fed said in minutes of its gathering on Oct. 24-25 released in Washington today. 'All members agreed that the risks to achieving the anticipated reduction in inflation remained the greatest concern.'"

"'The Fed was a little bit too optimistic about the outlook of growth,' said Brian Garvey, senior currency strategist with one of the world's largest custodians of investor assets with $10.7 trillion. The decline in October retail sales shows 'the housing slowdown did trickle down into consumption. This contrasts with what the Fed said in the minutes.'"

From MarketWatch. "Gold futures closed lower Wednesday to register a four-session loss of 2% after a report said total global demand for gold fell in tonnage terms during the third quarter as price volatility dampened consumers' appetite. Gold for December delivery closed down $1.50 at $623.80 an ounce. The contract ended above the day's two-week, intraday low of $616, but it still tallied a four-session loss of $13 an ounce."

"'Consolidation remains the short-term theme for gold, particularly with oil locked between $58-$60/barrel and the dollar showing signs of stabilizing,' said James Moore."

"On Wednesday, a report prepared by precious-metals consultancy GFMS Ltd. on behalf of the World Gold Council said total global demand for gold fell 3% in the third quarter in tonnage terms from the same period a year ago, but it rose 37% in value.
Specifically, jewelry demand was down 4% at 592.1 metric tons and investment demand fell 10% to 110.8 metric tons, but industrial demand was up 5% at 114 metric tons with electronics consumption at a new quarterly record of 79.1 metric tons, the data showed."

"'The price volatility seen at the beginning of the quarter dampened consumer appetite, which was then followed by a stabilization in the price and a subsequent resurgence in demand from consumers toward the end of the quarter,' said James Burton, chief executive of the World Gold Council."

"On the other hand, the WGC report also said gold production fell 12% during the same quarter vs. 2005, he said in an e-mailed report."

"December silver futures rose 5.5 cents to close at $12.945 an ounce, recovering from an earlier low of $12.50. In a report released late Tuesday, GFMS said hedge-fund hunger could drive silver back up to $15 an ounce in the next few months, even as demand from fabricators of the precious metal is forecast to drop this year."

"The London-based researcher forecast fabricator demand will fall just over 3% this year from last year's revised level. But investment demand, which has driven prices higher in the past year, should keep rising and could drive silver back up to $15 an ounce over the next few months, it said."

"'Investment demand remains the main driver of the price,' said GFMS. Also on Nymex, January platinum futures closed down $2.40 at $1,170.80 an ounce, while December palladium lost 70 cents to end at $318.80 an ounce."

The Toronto Star. "The tight platinum mining sector in Canada is poised to get even smaller with the proposed sale of TSX-listed AfriOre Ltd. to British-based Lonmin PLC — the same company that last year bought Toronto's Southern Platinum Corp."

"The $498.75 million all-cash deal will see one of Canada's few platinum producers rolled into the world's third-largest, which has operations near AfriOre's massive Akanani platinum exploration project in South Africa."

"'We may continue to see consolidation of some of the juniors, but it's going to be very select,' said Fiona Childe a geologist with Tau Capital Corp. and spokeswoman for AfriOre. 'It's going to be the best assets,' unlike in the gold sector where 'every gold company thinks they're a takeout target right now, whether it's realistic or not.'"

Tuesday, November 14, 2006


US$ Focus Shifting To Domestic Data

The Associated Press reports on the markets. "Gold futures settled lower Tuesday at the New York Mercantile Exchange following the choppy moves of the U.S. dollar and awaiting direction from economic data due later in the week. The December contract settled 50 cents lower at $625.30 a troy ounce. During the session the contract dipped to a low of $620 after the dollar bounced off its lows. December silver settled 0.05 cents higher at $12.89 an ounce."

"January platinum settled $30.70 lower at $1,173.20 an ounce. December palladium ended $7.25 lower at $319.50 per ounce."

"Larry Young, senior trader at Infinity Brokerage, said gold is set up for a technical breakout on Wednesday in either direction. 'Gold is set up to take out $631 on the upside and $619 on the downside,' said Young who will be eyeing currencies for signals."

"Technical-based moves are expected for gold and silver on Wednesday, then economic data on Thursday should provide more direction, Young said."

The "The US dollar was kicked down Tuesday by soft economic data. The greenback was falling, recently buying 117.518 yen, down from 118.19 late Monday. It was also sliding against the euro, which was trading at $1.2822 vs. $1.2803."

"The currency moves came after the Commerce Department reported slowing retail sales for October, down 0.2% compared with forecasts of a 0.4% decline. However, investors focused on the underlying figure: Excluding autos, sales dropped 0.4% compared with expectations of a 0.3% fall."

"Also, the Department of Labor said producer prices slumped 1.6% in October vs. consensus forecasts of a 0.5% dip. Excluding food and energy costs, core PPI fell 0.9% compared with an expected gain of 0.1%"

"'The dollar is getting smoked vs. the yen,' writes Randy Diamond, an analyst at New York-based Millar Tabak. 'The bond market reaction suggests they have officially removed the Fed from rate hikes and now are expecting rate cuts as soon as March.'"

"In the official sector, the European Central Bank says it sold 180 million euros of gold and receivables last week, or almost 12 tons."

From Reuters. "U.S. economic data due to be reported this week will likely offer few reasons to expect a rebound in the greenback after its recent four week slide. The dollar has fallen 7.5 percent against the euro this year, but has held the $1.30 level for about 19 months as strong investment flows into U.S. assets and higher interest rates in the U.S. compared to Europe have given provided support."

"An unexpected drop in producer prices and tepid retail sales weighed on the currency on Tuesday, and served as a reminder that the currency is anchored to a U.S. economy that is losing momentum, while growth may be accelerating in Europe and Japan."

"The market does not expect much support for the U.S. dollar from reports on consumer prices and net capital inflows due on Thursday either, suggesting another test of the $1.30 level against the euro may occur before year's end. 'Support for the dollar keeps waning from all fronts,' said Alex Beuzelin, a senior currency strategist at Ruesch International, in Washington."

"'More 'negative' numbers later this week will solidify the view the Fed won't raise rates any time soon, while we have hawkish central bankers in Europe and Japan,' he said. 'There are few incentives to buy.'"

"Even though most of Tuesday's euro gains were lost after comments from the French prime minister were interpreted as a call for a weaker European currency, analysts said the 12-nation currency could regain momentum against the dollar later this week."

"'For the dollar, the focus now is shifting a bit to the domestic data,' said Mark Meadows, a currency strategist at Tempus consulting. Capital inflows likely slowed to $75 billion in September, after a record $116.8 billion in the prior month."

"A weaker-than-expected CPI likely would undermine the investor confidence in the dollar's interest rate advantage, and a large drop in capital inflows could been seen as evidence that foreign investors are in fact diversifying away from dollar assets."

"'Signs that the U.S. economy is slowing keep piling up,' Meadows said. 'The Fed is likely to be on hold for some time, while we have central bankers elsewhere talking about higher rates and asset diversification.'"

Monday, November 13, 2006


US Dollar Rises As Rumors Dismissed

Forex News reports on the US Dollar. "The dollar pared its loss as the concern on China's Central Bank diversify its foreign exchange reserves away from the U.S. dollar fades. The dollar gained from nearly 1.29 to 1.28 against the euro and climbed more than 1 cent to above 118 versus the Japanese yen."

The Sydney Morning Herald. "The Australian dollar opened about half a US cent weaker today, after price of lead tumbled and the US currency flexed its muscle overnight. 'It looks like the commodity currencies underperformed on the night,' ICAP chief economist Michael Thomas said. 'The US dollar seems to have had quite a good run, heading north through the entire session.'"

"Mr Thomas said the US unit may have been boosted by comments from a Japanese ruling party politician overnight. Shoichi Nakagawa, the ruling Liberal Democratic Party policy chief, said in a media report that he was against the Bank of Japan raising interest rates."

"On the local interest rate front, National Australia Bank currency strategist John Kyriakopoulos said yield support for the domestic unit had diminished as expectations for another hike were pared."

From MarketWatch. "Gold futures fell Monday to close with a loss of more than $4 an ounce, as crude prices continued to decline and the U.S. dollar firmed ahead of key economic data this week. 'The feel of the market is not one of holding itself up, but one of preparing to run,' said Julian Phillips, an analyst at 'This is more consolidation at higher levels as the market is settling into the low $600s.'"

"Gold for December delivery closed down $4.30 at $625.80 an ounce on the New York Mercantile Exchange after reaching a low of $621.50. The contract lost $6.70 an ounce on Friday, a day after it hit a two-month high when comments from the head of the Chinese central bank confirmed plans to diversify the country's foreign reserves."

"On Monday, China's State Information Centre, a think tank, said in a report in the China Securities Journal that China should diversify its foreign-exchange reserves by building up strategic reserves of crude oil, important metals and bulk commodities.
'This is the usual remark from this source and it ultimately had little impact,' according to analysts at research firm Action Economics."

"'Now that rumors of presumptive gold acquisition by China have been relegated to the fairy-tale shelf, gold can make progress and work on facts,' said Jon Nadler, an analyst at bullion dealers 'Diversification resources such as the euro and the yen are still very much in the cards not only for the Chinese central bank, but for anyone else concerned about the cumulative effects of the tremendous deficits piled up over the past five years in the United States,' he said."

"Other metals also closed lower Monday. December silver fell 23 cents to close at $12.885 an ounce; January platinum lost $5.70 to end at $1,203.90 an ounce; and December palladium closed off $3.95 to $326.75 an ounce."

Friday, November 10, 2006


Gold Finishes Week With Rally Intact

Bloomberg reports on the markets. "Gold in New York fell from a two-month high on skepticism China will buy the precious metal to diversify its foreign-currency reserves. China, which has about 1 percent of its reserves in gold, said the country will maintain a policy of reducing holdings of U.S. assets. Gold, sold in dollars, generally moves in the opposite direction of the dollar."

"'People are skeptical,' said Leonard Kaplan, president of Prospector Asset Management. 'China is not going to buy precious metals for their reserves.'"

"Gold futures for December delivery dropped $2.10, or 0.3 percent, to $634.70 an ounce at 9 a.m. on the Comex division of the New York Mercantile Exchange. Prices jumped 3 percent yesterday to the highest since Sept. 6. The metal was poised for the fifth straight weekly gain. It has climbed 0.9 percent this week."

From Reuters. "China will diversify its $1 trillion foreign exchange reserves, the largest in the world, across different currencies and investment instruments, including in emerging markets, Chinese central bank governor Zhou Xiaochuan said on Friday."

"His remarks sent the dollar tumbling for a second day and fuelled a growing debate about how China should best use its fast-growing reserves, which are about 70 percent in U.S. debt securities, bankers estimate. The U.S. dollar to hit a 2-1/2 month low against the euro."

"Asked about selling U.S. dollars, he said: 'We do not have any new preparations for selling any currencies.' He said gold sales were not under consideration."

"'China now faces a dilemma. It either keeps the exchange rate stable or sacrifices sound economic growth,' Dou Erxiang, a researcher at Peking University, told the official newspaper Financial News."

The "The modest pullback (in Gold) doesn't break the recent uptrend, which has seen spot prices rally from under $580 an ounce in mid-September. 'It's making higher highs and higher lows, which is a positive sequence,' says Rich Ishida, president of Pasadena, Calif.-based Market Vane. He notes a rise in the bullish consensus for gold to 66% bullish, up from 62% Wednesday, according to Market Vane."

"Ishida identifies $650 an ounce as the next price target, with technical support at around $610."

Thursday, November 09, 2006


Gold Soars On China Comments

The Associated Press reports on the US dollar. "The U.S. dollar dropped to nearly two-and-a-half month lows against the euro Thursday on mixed U.S. data and renewed concerns over central bank diversification. After rallying on the back of better-than-expected U.S. trade data, the dollar began retracing its steps, pushed further by a weak consumer sentiment report and an unexpected rise in September wholesalers' inventories."

"Comments by Chinese central bank Governor Zhou Xiaochuan that China has a plan to diversify its reserves and is considering various ways of doing so prompted the dollar to extend its losses, particularly against its European rivals."

"'Zhou's comments provided a "good excuse to sell the dollar,' said Alan Ruskin, head of international strategy at RBS Greenwich Capital. The dollar's failure to capitalize on the trade data boost is 'a solid negative' dollar signal, he added."

"The dollar came under further pressure as the University of Michigan reported that its consumer sentiment survey dropped to 92.3 from 93.6 rather than an expected rise to 93.8. News that U.S. wholesale inventories piled up at a higher-than-expected rate during September as sales took their biggest drop in three years did not help the dollar."

"But the dollar's most significant drop came on the back of comments from Zhou during afternoon trading. 'The market is taking this as a sign that (China) will diversify out of the dollar,' Andrew Busch, global market strategist at BMO Capital Markets said. 'We've been hearing (this type of news) for weeks.'"

"China's yuan rose to a new high the U.S. dollar on Thursday to its highest level since Beijing revalued the currency 16 months ago. The yuan's appreciation, while still gradual, has been accelerating recently. Almost every week, it hits new highs against the dollar."

"Thursday's rate of 7.8697 to dollar broke the high set Wednesday, when the yuan closed at 7.8661 on China's tightly controlled currency markets. Since Beijing cut its direct link to the U.S. currency on July 21, 2005, the yuan has gained about 3 percent."

"But the United States and other trading partners are pushing for a faster rise, saying a weak yuan is contributing to China's bulging trade surplus by making Chinese exports cheaper and more competitive."

From mw. "The U.S. dollar tumbled and gold rallied Thursday on heightened expectations that China will diversify its rapidly-growing foreign-exchange reserves."

"Gold futures climbed to their highest level in two months after Zhou's comments. 'The remarks are especially crucial a few days after reports showed China's currency reserves have attained the $1 trillion mark, making such diversification plans inevitable,' said Ashraf Laidi, chief foreign-exchange analyst at CMC Markets in New York. 'We have long warned against the diversification wave by global central banks in light of the peak in U.S. interest rates and the need to diversify into other currencies and commodities that are boosted by steadying commodity prices,' he said."

"Central banks worldwide have been diversifying their reserves since 2001, according to Tony Crescenzi, chief bond market strategist at Miller Tabak & Co. Since then, they have reduced their holdings of the U.S. dollar from 70% of reserve assets to 66% at the end of March 2006. A number of countries, including Sweden, the United Arab Emirates, Qatar, and Russia all announced intentions this year to diversify their reserves away from dollars."

"Leading government think tanks in Beijing have recently recommended using some of their reserves to buy other assets such as gold and oil, which bodes well for gold.
'About 60% of total international reserves were held in gold in 1980. That figure was just 9% in 2005,' Crescenzi said. 'Obviously there is plenty of scope for central banks to increase their gold reserves going forward.'"

"However, he said 'it's very unlikely that China would consider a large switch in its dollar reserves."

"Gold futures for December delivery rose $18.50, or 3 percent, to $636.80 an ounce on the Comex division of the New York Mercantile Exchange, the highest close since Sept. 6. The percentage gain was the biggest since June 30."

"Oil rose as much as 2.4 percent to $61.26 a barrel today in New York after gaining 1.5 percent yesterday. Gold and oil often move together. Price charts also indicated gold may climb, some analysts said. The metal has traded above its 200-day moving average since Nov. 1."

"'Gold has taken on a life of its own,' said Matt McKinney, a commodity broker at Infinity Brokerage Services in Chicago. 'If it gets any help from a weaker dollar or stronger oil, that would surely catapult it.'"

Silver also rallied, closing above $13 an ounce for the first time since Sept. 6. Futures for December delivery rose 50 cents, or 4 percent, to $13.05.

Wednesday, November 08, 2006


Gold Traders Take Profits In Election Shadow

Bloomberg reports on the US dollar. "The dollar was little changed, trading near a six-week low against the euro, after the Democratic Party took control of the House of Representatives, giving them more power to block government spending and reverse tax cuts. Investors were reluctant to put big positions on the U.S. currency as the Democrats took five Senate seats from Republicans, one shy of the six needed for a majority, as a race in Virginia remained in doubt."

"'I don't expect substantial changes in legislation any time soon,' said Michael Malpede, a senior currency analyst in Chicago at Man Global Research. 'There will be a power gridlock. The impact on the dollar will be muted.'"

"'People are getting out of their short dollar positions as the result is pretty much what the market expected,' said Kathy Lien, chief currency strategist at Forex Capital Markets LLC in New York. 'We are still in a power gridlock. Investors are taking profit' by buying back the dollar.'"

"'I'm looking for a recovery in the U.S. dollar,' said Richard Grace, senior currency strategist at Commonwealth Bank of Australia in Sydney. 'I'm expecting an improvement in the trade deficit to $65 billion, which will help the U.S. dollar' gain to 118 yen and $1.26 per euro this week."

"The dollar fell 26 percent against the European currency in the three years through 2004 as the U.S. ran up a budget deficit of as much as $413 billion, from a surplus of $236 billion in 2000."

"The Canadian dollar finished lower against the U.S. currency on Wednesday, though it recovered some earlier losses, as dealers braced for an anticipated decline in Canada's trade surplus data due on Thursday."

"'It's still a data-sensitive environment and the trade numbers are seen as tier one,' said Jack Spitz, director of foreign exchange at National Bank of Canada. 'The downside risks are clear, given that there was a roughly 10 percent decline in the price of crude through the month of September.'"

From MarketWatch. "Gold futures closed Wednesday with a loss of more than $9 an ounce as traders responded to mid-term election results, a resounding victory for the Democratic Party, by locking in some of the metal's recent gains. The decline could come from the 'perception that the Democrats gain in Congress has eased some worry with a policy shift in D.C.,' said Peter Spina, at"

"But 'there is little doubt in my view that this is a misleading perspective as the shift in power to the Democrats will alleviate the massive trade deficit, issues in the Middle East, declining U.S. dollar,' he said."

"Then again, 'the chances of making any real significant changes that would in the end benefit the weakening U.S. dollar, look highly unlikely and any impressions otherwise will soon be discounted,' he said. Overall, 'gold has been unable to push above some resistance above and a brief consolidation is underway,' he said."

"Gold for December delivery closed down $9.40 at $618.30 an ounce on the New York Mercantile Exchange, its weakest closing level since Oct. 31. On Tuesday, the contract surpassed the $630-an-ounce level that has proved a crucial resistance point in the past week but then retreated to close slightly lower."

"'After the dust settles from the U.S. elections, the world will awake to see the U.S. more divided then ever before,' said Peter Grandich. 'Radicals around the world will take heart and the world will be as dangerous as ever before,' he said, adding that 'gold can only benefit in the long run.'"

"For now, other metals followed gold lower Wednesday. December silver futures fell 12.5 cents to end at $12.55 an ounce, January platinum fell $25, or 2.1%, to close at $1,167.30 an ounce and December palladium dipped $5.90 to end at $328.40 an ounce."

Tuesday, November 07, 2006


Yield Woes For The Greenback

Bloomberg reports on currency markets. "The dollar had its biggest drop versus the yen in more than six weeks and slumped against the euro as the spread between U.S. and Japanese bond yields narrowed amid speculation interest rates will rise faster in Japan and Europe."

"Bank of Japan Governor Toshihiko Fukui today pledged to 'take action in advance' on monetary policy, suggesting the bank will increase its key interest rate for a second time. The U.S. currency fell earlier after Federal Reserve Bank of San Francisco President Janet Yellen said nations that buy U.S.- denominated assets may pare their investments."

"'Fukui's comments were directly responsible for driving Japanese yields up, and therefore the yen,' said Lara Rhame, a New York-based senior currency strategist at Credit Suisse. 'The dollar has been trading in step with relative yields.'"

"The dollar fell to 117.39 yen at 1:26 p.m. in New York, from 118.31 late yesterday, the biggest decline since Sept. 21. The U.S. currency traded at $1.2809 per euro from $1.2724. The dollar was lower against 15 of 16 most-actively traded currencies tracked by Bloomberg News while the yen was higher than 14 of 16."

"'U.S. interest rates have declined, which is always dollar negative,' said Grant Wilson, a currency trader at Mellon Financial Corp. 'The interest-rate scenario is going against the dollar.'"

"Ten-year note yields fell a second day after homebuilder Toll Brothers Inc. said its revenue dropped in the past three months. Signs housing is slowing may fuel speculation the Federal Reserve's next move will be to cut interest rates."

"'Globally, people are still trying to buy yield,' said Thomas Tucci, head of U.S. government bond trading at RBC Capital Markets in New York. The housing slowdown is 'the major backdrop of why we think the Fed will be easing.'"

"'We expect demand from Asia to materialize for 10-year notes here or at slightly higher yields,' said Bulent Baygun, head of U.S. interest-rate strategy in New York at Barclays Capital Inc. 'Asian investors are very convinced we're at the end of the tightening cycle.'"

"New Zealand's dollar, the world's best performer in the past three months, rose as investors sought nations with high or rising interest rates on expectations borrowing costs in the U.S. may fall next year. New Zealand's benchmark interest rate is a record-high 7.25 percent, or 2 percentage points more than the Federal Reserve target."

"'U.S. dollar weakness returned to the market and the New Zealand dollar should find strength from offshore moves,' said Sean Comber, markets economist at ANZ National Bank Ltd. in Wellington. The Reserve Bank of Australia is expected to raise rates today and 'this will keep the New Zealand dollar supported,' he said."

From MarketWatch. "Gold futures retreated from the session's high above $630 an ounce Tuesday to close with a slight loss as traders eyed weakness in the U.S. dollar, a decline in oil prices and the progress of the nation's midterm election."

"Gold for December delivery closed at $627.70 an ounce on the New York Mercantile Exchange, down 20 cents for the session -- following a rise to a high of $631.20, the contract's strongest level since Friday. On Monday, the contract fell by $1.30 after failing to break resistance at $630, with traders reluctant to stage a full retreat after last week's almost 5% gain."

"Weakness in the dollar provided some support for gold, as the greenback lose ground against both the yen and euro Tuesday. But easing concerns about high energy costs, on the heels of weaker crude prices, weighed on gold. Dennis Gartman, editor of The Gartman Letter, said he remains bullish about gold's long-term prospects but expects some consolidation after the metal's recent run-up."

"'Nothing grows to the sun... not even gold bullishness,' he said. 'Resistance at $630 is formidable for the moment, and support, as noted here yesterday at the $618-621 level is too.'"

"December silver futures fell 8.5 cents to close at $12.675 an ounce, January platinum was down $4.40 to end at $1,192.30 an ounce and December palladium shed $1.40 to close at $334.30 an ounce."

Monday, November 06, 2006


Markets Eye Elections

The Associated Press reports on the currency markets. "The 12-nation euro fell against the U.S. dollar on Monday, retreating ahead of the American midterm elections on Tuesday. In afternoon trading, the euro bought US$1.2712, down from US$1.2718 late Friday in New York. The dollar rose to purchase 118.69 Japanese yen from 118.01 in New York."

"David Jones, chief market analyst at CMC Markets, said the debate is again 'wide open' as to where the Fed will take interest rates. The Fed has kept rates unchanged at 5.25 percent for the past three meetings."

"Otherwise, Jones said, with little economic data due out of the U.S. until Thursday, the focus is on the midterm elections. 'Political gridlock, slowing legislation, many may take this as another opportunity to put the greenback under pressure, despite the prospect of strong yields keeping the currency attractive well into next year,' Jones said."

From Bloomberg. "Gold in New York fell from a two- month high because a gain in the value of the dollar reduced the metal's appeal as an alternative investment. 'The economy is still hot,' said Leonard Kaplan, president of Prospector Asset Management. 'The Fed is not going to cut rates, so gold heads lower.'"

"Chicago Federal Reserve Bank President Michael Moskow today suggested borrowing costs may have to rise because the risk of inflation outweighs slowing growth. Fed officials decided Oct. 25 to leave the benchmark rate at 5.25 percent for a third straight meeting."

"Traders said market sentiment remained bullish on healthy technicals and a struggling U.S. dollar. Silver closed near its own two-month high in New York, while platinum retreated after surging the past week on speculation that an exchange traded fund could be launched."

"December gold at the COMEX slipped $1.30 to settle at $627.90 an ounce. Spot gold bullion was trading at $623.70/4.70, down from the close Friday at $627.50/8.50. NYMEX January platinum went down $12.70 to $1,196.70, unwinding some of a $134 rally late last week to the highest since September 11. Spot closed at $1,190/1,195."

"December palladium rose 60 cents to $335.70 an ounce. Spot palladium last fetched $331/336 an ounce. COMEX December silver bucked early weakness alongside gold to rise 12.50 cents to $12.76 an ounce, reaching $12.80, the highest since Sept 8. Spot silver rose to $12.65/72 from $12.58/64."

"Technical buying by hedge funds, worries about the dollar, and rotation out of the U.S. equity and energy markets helped gold rally $52 since it broke higher on October 24. The price is up $64 from the four-month low on October 4 at $563.50. 'Some of the technical indicators have turned very strong,' said Michael Widmer, metals analyst at Calyon Corporate and Investment Bank."

"'With all the deceleration in U.S. economic growth, there could be further pressure probably on the dollar and that means that you should have further upward pressure on the gold price,' he said."

"Most investors seemed comfortable retaining their gold positions, believing the elections would have minimal, or indirect, impact on the market. 'It would depend on how the foreign exchange markets are going to react. If one of the houses changes hands I suppose you have got the prospect of gridlocked government,' said James Steel, senior analyst at HSBC."

From MarketWatch. "On a short-term basis, 'gold is overbought,' said Ned Schmidt, in his latest Value View Gold Report released over the weekend. 'Some rest is likely.' It's difficult to guess how much of the recent rise in gold prices is related to the U.S. election, he said."

"'Given the over bought condition and the U.S. election on Tuesday, some weakness in the latter part of the week would be reasonable,' he said."

The Standard. "The Hong Kong Monetary Authority said the Chinese yuan will soon test the 7.8 to the US dollar, the level at which the local currency is pegged to the greenback, chief executive Joseph Yam Chi-kwong said Monday."

"Yam, speaking at a meeting of the Legislative Council's financial affairs panel, said however, that the recent appreciation of the yuan had so far, not destabilized the local peg. Nevertheless, the psychological threshold of HK$7.80, will soon be tested as the yuan seems poised to break through further resistance levels. Hopefully, this rise will not destabilize the local currency system, said Yam."

"The yuan retreated to 7.8811 versus the US dollar Monday, down from Friday's close of 7.8716 on the over- the-counter market in Shanghai."

Sunday, November 05, 2006


The Euro, US Dollar And Gold

The Turkish Daily News. "The euro will disappear within 20 years because of the inability of member states to stick to the rules underpinning the European Union's single currency, prominent U.S. investor Jim Rogers predicted. 'The euro is not going to survive in my view,' Rogers said in an interview with Reuters in Seoul. 'I own the euro, but I don't expect it to be around in 15 to 20 years,' he added."

"Rogers called the currency used by 12 EU countries a 'political' currency, not an economic one. This, he said, would be its undoing. 'Most of the members are not abiding by the terms of the Maastricht Treaty ... Everybody is either changing the rules, or ignoring the rules, or fudging the rules,' he said, referring to the 1992 treaty that led to the creation of the euro."

"'No currency union has ever survived in history. No free trade pact has survived in history,' he said."

"He stuck to his bearish view on the dollar and even predicted that its days as the world's reserve currency might be numbered. China's yuan could potentially grow into the world's reserve currency, but only if it becomes freely convertible and if China opens its economy more widely. 'It does have the size and the liquidity and the size of the economy, potentially,' Rogers said, adding that it was the only currency with the chance of supplanting the dollar within 10 to 15 years."

"Rogers said the United States was headed for a deep recession because of weakness in the housing market and the large debts it has incurred. 'The U.S. is unbelievably leveraged, over-extended financially and economically, so eventually we are bound to have a serious economic setback,' he said."

"Rogers urged investors to switch into agricultural products such as wheat or cotton to take advantage of what he sees as the next leg in an unfolding commodities boom. Prices were historically low and supply was failing to catch up with demand."

From Bloomberg. "Gold may rally for a fifth straight week, the longest stretch since the metal climbed to a 26-year high in May, on speculation a slowing U.S. economy will erode the value of the dollar. Twenty-seven of 35 traders, investors and analysts surveyed by Bloomberg from Sydney to Chicago on Nov. 2 and Nov. 3 advised buying gold, which rose 4.7 percent last week to $692.20 an ounce in New York."

"The percentage of respondents who expect prices to rise was the highest in more than a year. Four people said to sell the metal, and four were neutral."

"Gold has climbed 9.1 percent in the past four weeks, rebounding from a two-month slide. The U.S. economy grew at an annual rate of 1.6 percent in the third quarter, the slowest in more than three years, primarily because of the biggest drop in home construction in 15 years. The dollar is down 6 percent against a basket of six major currencies this year."

"A weaker dollar is one of the 'positive factors leading to a change in sentiment in the gold market,' said Greg Orrell, who manages the $100 million OCM Gold Fund in Livermore, California. 'Economic data is increasingly showing the U.S. economy is slowing down, leading to anticipation of a more accommodating monetary policy.'"

"Gold futures for December delivery rose $28.20 an ounce last week on the Comex division of the New York Mercantile Exchange. The Federal Reserve hasn't raised interest rates since June 29 amid the housing slump."

"'Gold shifted its attention away from the oil price and back to the dollar,' said Alexander Zumpfe, a trader at Heraeus Metallhandels GmbH in Hanau, Germany, which owns five precious- metal refineries globally. It now costs about 10 barrels of oil to buy an ounce of gold, compared with the long-term average of 17.5 barrels, Zumpfe said."

"'If the ratio would move toward this average, this would mean that gold is expected to show a relatively better performance than the oil price,' Zumpfe said."

"The gold rally is reviving the speculative demand that helped spur gains in the first half of the year, some traders said. 'The funds are creeping back in,' said O'Neill of Logic Advisors. 'I rate gold a `buy.'"

"Hedge-fund managers and other large speculators increased net-long positions in Comex gold futures in the week ended Oct. 31, according to U.S. Commodity Futures Trading Commission data."

Some analysts expect the dollar to rebound, eroding gold's appeal. 'Rallies such as this, which depend so much on the dollar, tend to correct quite quickly and sharply,' said Matthew Turner, an analyst at Virtual Metals Consulting Co. in London."

Friday, November 03, 2006


US Hard Landing Prospect Boosts Metals

MarketWatch looks at the metals. "Gold futures closed higher Friday to end the week nearly 5% higher, boosted by growing tension over Iran's nuclear activities as well as strength in oil from various threats to production. Strong U.S. employment data lifted the dollar, providing earlier pressure on gold which then limited the precious metal's gains."

"Gold for December delivery rose by $1.40 to close at $629.20 an ounce on the New York Mercantile Exchange. After climbing a total of over $22 in three sessions, it ended the week 4.7%, or $28.20, above last Friday's closing level of $601. December silver futures fell 1.5 cents to finish at $12.635 an ounce, but it was 4.6% above last week's close."

"Meanwhile, the dollar rallied against major currencies, touching one-week highs versus the yen and Swiss franc, after a government report showed the labor market is on fairly firm footing, damping expectations the Federal Reserve will lower interest rates soon."

From Reuters. "Spot platinum jumped nearly five percent to an eight-week high of $1,212 an ounce on Friday, boosted by talk of a launch of a platinum exchange traded fund and a break above key resistance, traders said. The launch of a ETF would potentially mean the issuer of the security would have to buy large amounts of platinum."

"'There's been a rumour doing the rounds, an imminent launch of a platinum ETF,' the trader said. 'There's been a lot of buying ahead of that and it picked up momentum after breaking through key resistance at $1,160.'"

"Precious metals have also been boosted this week by a run of weak data on the U.S. economy, suggesting the world's largest economy could be heading for a hard landing."

From Bloomberg. "The dollar rose the most in four weeks against the euro and yen after a government report showed the U.S. unemployment rate declined to a five-year low. The payrolls report suggested inflation will remain a greater threat to the economy than traders had speculated because of job creation, increased hourly earnings and a lower unemployment rate."

"Traders canceled bets a slowdown in the world's largest economy will push the Federal Reserve to cut borrowing costs from a 5 1/2- year high early next year. 'This is not the type of economy the Fed cuts rates on,' said Lara Rhame, a New York-based senior currency strategist at Credit Suisse. 'It adds up to higher yields. Given that foreign exchange is closely tracking the fixed-income market, it's very good for the dollar.'"

"The dollar rose 0.6 percent to $1.2710 per euro at 1:42 p.m. in New York, and touched $1.2684, from $1.2780 yesterday. The U.S. currency increased 0.9 percent to 118.12 yen, and reached 118.19, from 117.13 yesterday. The yen fell to 150.14 per euro from 149.70."

"China again ordered banks to set aside more money as reserves in its effort to curb lending and stop the world's fastest-growing major economy from overheating. China, which has raised interest rates twice since April, wants to prevent cash generated by a record trade surplus from funneling into investment projects. Premier Wen Jiabao vowed on Oct. 18 to keep controls on lending to cool a spending binge the World Bank warns could lead to overcapacity and falling profits."

"'The liquidity inflow situation is too much for the central bank to handle,' said Liang Hong, an economist at Goldman Sachs Group Inc. in Hong Kong. 'This won't be the last time that China tightens monetary policy.'"

The FX Street. "The Swiss franc has been under pressure for some time now because of developments in Swiss yields relative to Eurozone yields. And, with the US central bank on hold, the liquidity cycle has not yet reached a point where currencies such as the CHF will begin to strengthen."

"The inflation picture has thus changed significantly over the past few months. Back in June, CPI inflation was running at no less than 1.5%, at a time when large increases in producer and import prices were exerting growing pressure on the SNB already. Hence, the risk was that monetary policy would be tightened faster than was consistent with a gradual normalisation of policy."

"We now expect inflationary pressures to be very moderate in 2006 and 2007, with inflation averaging roughly one per cent in both years. This is more or less the same as the SNB is expecting. The bank’s latest policy report says that there is no reason to expect inflation to tick up in 2007 – 'An increase in inflation is not to be expected. A number of special factors whose individual significance is hard to assess are easing pressures on prices.'"

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