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Forex outlook:
The dollar gain against the Euro as concern for a rate cut eased due to a strong data on the home sales and manufacturing. The minutes of the central bank published yesterday showed expectation for a pickup in the economy and still view the inflation as its main concern. ``We are starting to see some recovery in the U.S. economy, which increases the risks that the Fed's next move is a hike rather than a cut,'' said Matthew Strauss, senior currency strategist in Toronto at RBC Capital Markets Inc., a unit of Canada's biggest bank by assets. ``The dollar is gaining strength.'' The dollar traded at $1.3454 per euro at 2:50 p.m. in New York, compared with $1.3429 yesterday and the record low of $1.3681 set April 27. The dollar has risen 1.4 percent against the euro this month, for the biggest gain since February 2006. The U.S. currency gained 1.9 percent against the yen in May and touched a three-month high of 121.98 yen today. The dollar increased 1.4 percent this month versus the Swiss franc and 1 percent against the British pound, rebounding from a 26-year low of $2.0133 per pound set April 18. The investors will eye the U.S Non farm payrolls at 12:30(GMT). ``The downside risk on the payroll report is increasing,'' said Kathy Lien, chief currency strategist in New York at DailyFX.com.
The Canadian dollar rose to a 30-year high following a government report showed the economy grew in the first quarter at its fastest pace in almost two years.The currency rose to C$1.0694. ``It's the perfect environment for Canada in the context of elevated commodity prices,'' said Clement Gignac, a senior economist and chief strategist for National Bank Financial in Montreal, signaling Canadian and U.S. currencies may become equal. ``It just reinforces our view that we're heading toward parity over the next 12 to 18 months.'' Growth in the world's eighth-biggest economy quickened to an annualized 3.7 percent rate between January and March, surpassing the central bank's estimate of 3.5 percent and bolstering the case for higher interest rates. The economy accelerated from a revised 1.5 percent pace in the fourth quarter. ``The strength of the economy suggests that it's still a buy-Canada scenario,'' Jack Spitz, director of foreign exchange trading at the National Bank of Canada in Toronto.
Gold: The precious metal rose in New York, and silver jumped the most in three months as a decline in the value of the dollar against the Euro boosted the appeal of precious metals as alternative investments. Gold futures for August delivery rose $7.40, or 1.1 percent, to $666.70 an ounce on the Comex division of the New York Mercantile Exchange. ``On the bullish side of things, support held at $650, and there may be momentum for a bounce back to $680,'' said Tom Hartmann, a commodity broker at Altavest Worldwide Trading Inc. in Mission Viejo, California.
Crude Oil: The black gold rose after a government report showed an unexpected decline in U.S. inventories. Crude oil for July delivery rose 52 cents, or 0.8 percent, to $64.01 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. ``The draw in crude oil and the gain in gasoline can largely be attributed to imports,'' said Jason Schenker, an economist at Wachovia Corp. in Charlotte, North Carolina. ``The crude-oil drop was a surprise but attention is still focused on gasoline. Gasoline supplies rose but are still disconcertingly low.''
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