Market Highlights
- US dollar softens on weak data
- Gold past $1,150 record high
US dollar softens on weak data
The US dollar slipped against the EUR yesterday after its biggest gain in three weeks just the day before. After falling to US$1.485, it recovered till just short of US$1.50 levels. Fresh data did little to change views that the U.S. interest rates will remain at record lows well into 2010. Reports showing slightly higher-than-expected U.S. inflation and a slide in new home construction. Most dealers acknowledge that the dollar’s long term declining trend is intact. Depsite the possibility that the Federal Reserve may be withdrawing its massive stimulus injection soon, they are still confident that the Federal Reserve would refrain from raising its record low interest rates. St. Louis Fed President James Bullard commented on Wednesday that officials will probably adjust asset-purchase programs before they resort to hiking rates.
“That throws cold water on any lingering thoughts of rate hikes,” said Jacob Oubina, strategist at Forex.com in Bedminster, New Jersey.
This comment offsets the US dollar rally on Tuesday as covered in Wednesday’s commentary which spoke above the Fed Chairman Ben Bernanke being attentive to the US dollar’s value.
Gold past $1,150 record high
The bullion rose to a record high above $1,150 an ounce on Wednesday as stronger-than-expected U.S. consumer prices and a steadily weakening dollar stirred inflation fears and caused investors to seek refuge in the gold’s safe haven. “There is a lurking concern in the background that still exists,” said Bill O’Neill, partner at LOGIC Advisors, noting that investors were worried about the vulnerability of banks and the financial system.
Analysts commented that the precious metal remains firmly underpinned by technical support after several days of gains. With a buildup of momentum, it is likely that gold would continue to push for fresh highs in upcoming sessions.
By Ho Canjie, Corporate FX Dealer
