Forex outlook:
The sterling reached its strongest level in more than a quarter-century to 2.0133 after a U.K. report showed wage growth quickened and the Bank of England's minutes said two policy makers voted for higher interest rates. ``The job report this morning reinforced expectations the bank will move soon, and the pound responded,'' said Andrew Milligan, head of global strategy in Edinburgh at Standard Life Investments, which oversees about $265 billion of assets. ``The market is driven by rate expectations and differentials.'' The draders see more room for the pound to rise, ``The momentum for the pound to rise is still there,'' said Gavin Friend, head of currency strategy at Commerzbank in London. ``The move higher won't be a straight line.'' Yesterday data showed an unexpected acceleration in the inflation rate which led to an increased forecast for the BOE's Bank Rate among U.K economists.
U.S slower inflation and growth concerns dimmed the allure of the American currency among international investors, hence the dollar traded within a cent of its record low against the Euro. During the day the dollar reached $1.3616 , the weakest since Dec. 31, 2004 before easing around the 1.3580 levels. ``The macro backdrop for the dollar is bearish,'' said Dan Waldman, senior foreign exchange economist in New York at Barclays Capital Inc. ``There is still upside in the euro gain against the dollar.''. The dollar also dropped 0.44 percent to 118.39 yen, falling from a seven-week high of 119.87 yen on April 16. Interest-rate futures contracts show traders see a 30 percent chance the Fed will reduce its benchmark by a quarter- percentage up from 25% yesterday.
Gold: prices rose in addition to the slid of the dollar which increased demand for a hedge against further declines. Gold for immediately delivery rose $1.40, or 0.2 percent, to $687.95 an ounce at 1:58 p.m. New York time ``The long position in gold is hedging against weakness in the dollar,'' said Nick Ruggiero, a trader at Eagle Futures Inc. in New York. ``Any time there's a sell-off in gold, the buying has come in.'' The precious metal will encounter fears resistance at 700$ an ounce. ``The gold market needs to see strength in the European economy and weakness in ours to maintain the upside momentum,'' said Stephen Platt, a commodity analyst at Archer Financial Services Inc. in Chicago.
Crude Oil:The Black Gold was little change trading around the 63$ a barrel. The tit trading band followed a mixed data showing a drop in U.S oil stocks and a 2% rise in the refineries operation. Report from the Energy Department showed that U.S. refineries increased production of gasoline and other fuels. ``Increased refinery runs will weigh on the market,'' said Eric Wittenauer, an energy analyst at A.G. Edwards & Sons Inc. in St. Louis. ``We've been waiting for refiners to come back from turnarounds and increase gasoline output. Some of the worries about gasoline supplies will ease now.''
Pool position:
