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Dollar bounces back On G7 apprehensions

As a result of G7 summit Euro which was ahead as compared to the Dollar last week came down. It is evident that the Euro closed more than 1.575 mark on Friday but G7 summit is blamed for its drop. As the dollar is getting more admiration there are chances that G7 might show an involvement in it. Seeing the apprehension on the frequent variation expressed by the Group of Seven the Dollar which has noticed a one week-high as compared to the Euro. This followed a fall of more than ten percent over the previous year.

For the first time the G-7 altered their statement as compared to the currencies in four years. This happened after the meeting that took place in Washington on April 11 where it was promised to check the exchange markets cautiously. The Euro slashed down as compared to the Yen and it cut down losses as compared to the dollar in the Asian stock market. As a result the shareholders had to slash down the holdings for high-yielding possessions that are invested in Japan.

It was noticed that the dollar have risen more than $1.5765 per Euro from $1.5808 on April 11 in New York. It arrived at more than $1.54 which is considered a strong level to reach since April 3.

A currency analyst by profession with RBC Capital Markets which is a investment banking unit of Royal Bank of Canada at Sydney Mr. Sue was of the view that for a shorter period the G-7 communications will be momentous. He also added that involvement is bound to happen and different speech is expected. He said that he will anticipate to the reinforcement of the dollar in coming weeks. The currency also underwent a change as 100.87 yen from 100.93. The yen witnessed a raise to 157.72 per euro from 157.54.

Mr. Sue said that this week there are chances that US currency might increase more than $1.54. Mr. Akio who is a chief manager of foreign exchange trading in Mitsubishi UFJ Trust & Banking Corp in Tokyo said that the traders will be unwilling to push the dollar more down yet there are probabilities that it should fall. By assets it comes at second place as a unit of Japan’s largest banks. Â

He added that the dollar will increase to 1102.18 yen and $1.54 euro today. According to Median forecast of thirty-six economists in a Bloomberg News Survey the consumer prices of Britain are expected to rise an annual 2.4 percent. The office for National Statistics will be releasing the producer price statistics today and afterwards they will be producing figures for price rise tomorrow in London.

It has been noticed that Bank of England has slashed the interest rate by 0.23bp and it’s been the third time since December that they have slashed the price. There has been a talk that the conditions have got more constricted which has created a danger of slow economic growth.  Those who enjoy the authority are busy in creating a balance of the danger of sooner price rises determined by high costs of food and energy as this will gain a grip in the economy. It was earlier today that the Pound was reportedly traded at a minimum of 1.9652 against the US dollar and is trading at 1.9707 lately.Â

The dollar rise, forces the gold to fall one percent

April 14th, 2008

Following the meeting of Group of Seven today which lowered the metal’s plea as an optional investment, the gold came down by more than one percent with as euro came down against the dollar. From Platinum, Palladium, and silver they all witnessed a fall of three percent. The platinum slid down below the two thousand dollars an ounce and as for the silver it dropped to a ten day low.

The gold before increasing to $920.48/921.18 it slipped to $914.08 an ounce against $924.58/925.38 in New York. On March 17 it reached to $1.0380.78 which is a record. According to Mr. Tom who is a metal strategist at Mitsubishi Corp until the euro/dollar duo break from its position of $1.5548-$1.5858 lately these costly metals will probably persist to tread water.

The Bullion investors are still optimistic for a time period to a maximum of six months. But they would like to warn that if more liquidation is continued then that it could result to distress in the selling of the merchandise in the coming future. Asian shares are also dropping and for the fifth time in succession the European stocks are also falling. The euro slashed down as compared to the dollar following the Group of Seven showed a major concern for the major changes in the major currencies across the world.

The profits were also restricted with the constant fears that directly concern the economy of America. The euro was at last at $1.5806. A firm dollar formulated in making the gold more valuable for the bearer of other currencies and regularly slashes bullion demand. The oil became easier to trade i.e. around $108 a barrel.

Not able to stay over the main level of $928 encouraged the investors to do more business. For making their future marketing decisions they are awaiting this week’s American data for retails sales, prices for the producer, quarterly earnings by the banks in America, and consumer prices. There are some analysts who are of the view that the there are chances that the gold will make progress.

According to a report of Standard Bank there are probabilities that purchasing a good deal might raise the prices forward seeing the nervous week. The gold enjoys a support at $912 along with $908 and $902 as prospects. As for the other markets, American gold for the month of June delivery slipped down $2.48 to $924.48 an ounce. Platinum slashed down to $1938 an ounce and was last estimated at $1946/1956 against $ 2000/2005 late on Friday which concluded a feeble gold.

It was on March 4th when it touched a record high of $2288. Staying optimistic Citigroup Global Markets and increased the forecast prices for platinum to $2003 an ounce in 2008 and $1798 in 2009 as compared to their early forecast of $1694 and $1498 an ounce.  Â

According to a market report it has been said that the decision for the platinum price that is kept over $1998 during the first quarter of 2008 has successfully created a standard for the prices of the metal. The silver also noticed a downfall of $17.23 an ounce before it rose up to $17.49/17.54 an ounce against the $17.73/17.79 in New York. The Palladium also witnessed a downfall to $454/461 an ounce to $464/472. Â

At close of the market S&P 500 closed at 52 week low

March 12th, 2008

With the news of forced liquidations, true reports, and missed margin calls the treasury yields and S&P 500 slashed down to 50 week low. Yields of two year were slashed down to around 11.0 bps to 1.50 percent and yields of thirty year were down from 4.0 bps to 4.55. The contract of Eurodollar for the month of June increased up to 13.4 ticks to 97.62. It slashed from 29.32 points to12040.37. Dow Jones Industrial Average closed 214.57points to 12040.37. The NASDAQ crashed down 52.9 points to 2220.47. S&P TSX index of Toronto closed 234.6 points to 13369.22.

Some of the prior jobless assertions, incomplete home sales, and sales of the chain store were included to the different American economic indicators and they were all quite good. Some of the market analysts have reacted to the news that one of the mortgage fund Carlyle Capital Corp have failed four of the margin calls and possess more than twenty billion dollars as liability that has been subjected by Freddie Mac and Fannie Mae of GSE.

The equity and the fixed income cemented the rumors which stated that Fannie and Freddie would be granted straight government obligation debt from the American government. Mr. Richard who is a government bond strategist with BNP Paribas said that the panic was created in the mortgage market.

He also added that it all goes to show that mortgage market is not in a good position and there is not enough liquidity and also the hedge funds. Ivey Purchasing Managers Index is the latest one that is main release in Canada. Earlier in the last month it was anticipated a little weaker at 56.0 mark but landed up to 62.0.

The dollar of Canada slashed down to a quarter cent which is ahead of the figures those were projected by Ivey. Against the USD the dollar of Canada slashed down to 0.20 cents to 1.0136. Canadian fixed income didn’t give much importance to the figures issued by Ivey and the main spotlight was on data related to the Canada’s payroll. The bonds of the Canadian government also slashed down 11.0 bps to 2.52 percent. Bank of England, Overseas, and Central Bank took a decision for not making any changes in the rate of interest.

Canada’s Employment moves strongly as compared to American March 12th, 2008

It was a surprise that the administration of Canada opened more than forty three thousand jobs in the month of February as on the contrary the American data showed a downfall of around sixty-two thousand jobs in the month of February. As per the expectations of the analysts the market of Canada’s employment for consecutively second month of February totaling of more than forty three thousand new job openings which was around fifteen percent consent by the experts.

Profits were also increased after the growth of more than forty-five thousand jobs in the month of January. With this the number of jobs for the past twelve months grew to more than forty-six thousand. Going according to the agreement the estimate made by the experts was a gain of more than two thousand jobs in the month of February. Mr. Douglas who is a Deputy Chief Economist with BMO he was of the view that the report came as a surprise and there is no worry to be made for the Canada’s domestic economy.Â

On the contrary the employment data of America showed a downfall of more than sixty-two thousand for the month of February. The job figures for the month of January underwent a modification with the previous loss of around sixteen thousand jobs to the loss of more than twenty thousand jobs. It was also noted by the report that more than forty-five thousand jobs were formed in the month of December. Â

The outstanding amount in The Term Auction Facility was raised to hundred billion dollars on Friday by Federal Reserve. More than forty billion dollars was raised in the auction respectively on March 10 and March 24, it is an increase of twenty billion dollars from the amount that was declared on February 29th. In a press note it was said that Federal Reserve will persist on with the auction sizes as per the guarantee and at least for six months the auctions will be continued.

American economy might require extra motivation to boost up the financial policies of Federal Reserve for increasing slow economic condition. R. Swagel who is the Treasury’s Assistant Secretary told the reporters that although nonfarm labor is poor for the month of February and the American economic basics are healthy.

According to a document released by Canadian Federation of Independent Business the owners of Canada are facing difficulties for finding workers to work on a routine basis. According to the Federation last year for four months majority of the jobs remained vacant and the employers had to face botheration in filling the vacancies.Â

There were so many statements released and the speakers from European Central Bank and Federal Reserve gave their expert comments during the conference at Bank of France on the rising prices and globalization. Mr. Noyer who is Governor of Bank of France said that every country is facing the problem of inflation which has become a main hindrance in the growth.

The amazing journey for the euro continues and after the verdict of ECB for not making any changes in the rates which was aimed at taking the currency downward. In the press conference Mr. Trichet was repeatedly questioned about the euro the American officials prefer the dollar. Mr. Trichet commented that euro increased of 1.5371 to 0.705 as compared to the American dollar. The euro has increased 932 pips and it is an increase of about ten cents.At the time of closing of European stock market Eurostoxx was down at 50.76 points to 3088.00, Britain’s FTSE was hundred down to 87.09 points to 5764.40, DAX of Germany down to 90.38 points to 6590.30. As for two years returns of Germany Bunds were up by 4.2 bps to 3.29 percent. For the yields of Britain they were down at 1505 bps to 3.88 percent.

Record High for EUR/USD

March 12th, 2008

EURUSD has reached to new heights as the pair will be reaching the landmark of around 1.5298. It is a big step when it is compared to the sudden price change where the dollar was struggling for its re-existence. The start of New York’s session quickly overcome with this attempt when it was realized the economic records generated fear that the consumer sector is no more concerned with the employment.

The American labor market data of February has really affected the report of Friday’s non-farm payroll. The reduction in the jobs was more than eleven percent and it showed that the working staff is not reduced by the companies. The fact cannot be denied that products those are related to the service segment witnessed a layoff as the government and non-profit organizations showed a rush.

It was not at all expected that the report of ADP employment will register a downfall of more than twenty thousand and it is the worst reading since June in 2003. It was evident that the goods and services segment witnessed considerable losses. The service segment to employ new employees but it is making progress at a very slow speed. It does not promise the employment of ISM non-manufacturing index and not for the NFP release on Friday.

The reduction in the employment will only add on to the already worsened American economy. ISM manufacturing gauge recorded the downfall that is the worse in the previous four years and the service segment reported deeper concerns. The print of 49.3 was registered a two point high than the standard point of around 4.6, this is a improvement as compared to the readings of the month of January which is known as the worst reading since 2001.

The world’s biggest economy is in depression and they are just waiting for a word from government’s GDP. After the ISM report came there were certain developments made while some of the developments were reducing. A significant development was detected in the business. This shift is suggestive of the inventory in the same period and the readings of the new orders and the employment were also reducing and not at al impressive.

It was a sudden surprise that the export orders shot down to more than 45 percent and the new dollar provided the reduction to the foreign consumers. Now when EURUSD has been making indecisive moves in getting further to the mark of 1.5298, the basics offer to additional worsening of the American dollar. The experts are not denying the fact for making further developments in the same area that the basics are also favorable.Â

Euro Surpasses Dollar March 12th, 2008

As compared to the weaker American dollar the Euro registered a hike of around 1.538 The ECB probably will be keeping the interest rates at 4.00 pct Mr. Jean will also be discussing the risk aspects of rising prices. With the rise of the energy prices it advocates that increase of the consumers will continue to quickly rise in the euro zone. There was probability that ECB will be deserting their headline rates and it remained unaffected.

Mr. James who is an analyst with CMC Markets was of the view that if there is a relaxation in the monetary policies in Europe then it seems that it will remain for sometime. When compared the data available with ADP showed that during the month of February companies of American private sector has terminated more than twenty thousand jobs and it only has worsened the issue that is mainly related to the American economy. It also suggested that Federal Reserve will be reducing more interest rates.

Mr. James was of the view that with the help of overnight trade for Euro/dollar has touched than 1.50 level and it was also assisted by the American low economic condition and it has increased the pressure on Fed to decrease the rate in the FOMC meeting. Â

The data of non-farm payroll of America will be closely monitored and if the American economy’s condition remained the same i.e. weak then it will not be a good sign for the dollar and can bring future losses. On the other hand the pound also gained as compared to the dollar getting close to the two dollar level. The fact cannot be denied that it remained below the euro.

Keeping in view the inflation the again the worries for the economy has showed up and around 5.23 pct of the interest rate was also fixed by the Bank of England. Until the month of May most of the market analyst said that necessary steps would be taken for further cutting of the rate of interest.Â

Mr. James was of the view that the inflation will be a matter of great concern for Bank of England but the rumor that has been going for a while in the direction of quarter point in the second quarter. It would not be possible for Bank of England to sustain a dovish position after the next rate cut and it is well maintained by the dollar.

There is also bad news from Britain housing market where Halifax reporting a fall in the prices by around two percent in the month of February.

Buy Gold and Play Safe!

February 11th, 2008

After the rate cuts by the Fed, the prices of gold are touching the sky. It has become one of the most valuable assets after the U.S dollar. As the U.S dollar is already weakening and the prices of other commodities also falling, Gold is the only metal that is going strong. Also, the dollar index, which tracks the performance of the greenback against six other major currencies, declined 0.6% at 75.125.

Gold futures set a new record $942.20 an ounce on Wednesday, when the Federal Reserve had cut the fed funds rate by 50 basis points to 3.0%. This shows that the Federal Reserve is open for more cuts, indicating it’s concerned about the economic outlook.

With the love season in full swing, people are likely to purchase Gold for their loved ones. The owners of the Gold Companies like D’damas have confirmed that they are expecting a surge in the jewllery sales during Valentine’s Day season by 17-18% this year. This is not restricted to just India but overseas as well.

People are attracted for buying more of gold because it is seen as an alternative asset against U.S dollar. And, in the present circumstances, where dollar is facing a slump, bullion is ready to take its place without any deliberate effort. People see it as a safe and secure investment.

Inflation and improbability require insurance. Gold is an insurance against all odds. If you possess gold, it is considered as a safe option. Even if its prices go down, you don’t need to dispose it off because it is bound to rise again. And you can then make a profit by selling it at a higher price.

On the other hand, the demand of Gold has suffered due to lower imports amid high prices. The reason being that the U.S economy is seeing a set back.

The future of Gold also lays in the hands of the US CPI inflation data, which will determine the change in prices. If the dollar still goes down, then gold is likely to be benefited and will rule the market.

In addition, the prices of the base metals and oil are also lower comparatively. Platinum stands at 1783, while Palladium at 421. Silver went down at 16.76. Gold being at the zenith, 904.

Bullion is rocking and is meant to reign unless the dollar makes a comeback. So, buy Gold and play safe.

US Dollar recovers, strengthens against Yen

January 18th, 2008

On Friday, Asian afternoon trade witnessed strengthening of US dollar against the Yen. The budge followed the purchase of Japanese currency and greenback by investors.

Following the speculation of Fed cut rates by 75 basis points near the closing of the month, the week saw fall of dollar to 105.92 yen. The fall has been the lowest in last three years.

Talks of implementing economic package of 150 billion dollar (including tax breaks and higher spending), to encourage the unhurried economy, by the bush administration has triggered the dollar.

The long weekend has also led to the purchase of dollar by investors, as the Martin Luther King holiday of 21st will keep US economic market closed for three days.

In afternoon, Dollar traded at 107.07 yen high compared to 106.61 at the morning in Sydney. Whereas, variations were seen in Euro as it was traded at 1.4644 instead of 1.4643.

Treasury economist united overseas bank, Thomas Lam, said profit taking and position changes are being speculated due to recent selling of dollar in high intensity. The economist also believes that US dollar hasn’t completely recovered and has still some burden on it.

Heavy loss from Merrill Lynch as well as the 2.5 percent drooping of the Dow Jones Industrial Average raised the panic and fear of collapse, causing the investors to search for a safe bet.

John Noonan, analyst Thompson IFR, believes the panic and disturbance among investors shows that there are hardly any chances of further opening-up of long currency positions and risk strategies by Japanese and US investors. Also, the ensuing ouster flows are expected to hold US dollar and Yen against Australian and European currencies (Australian dollar and euro).

Australian dollar was being traded at 87.65 US cents from 87.88

The chances of threatening deceleration of worldwide economic output weakening the Australian currency, has made investors cut down any bets on increase in interest rates by Australia.