|
Forex outlook:
The dollar climbed against the Euro for the fifth consecutive session on Tuesday to two-month highs as rising U.S. Treasury yields lured investors. The dollar is trading around the levels of 1.3316 against the Euro, around the levels of 121.75 against the Yen and around the levels of 1.9765 against the sterling.
With few major U.S. economic indicators on Tuesday, dealers stuck to buying dollars based on the recent advantage of U.S. government bond yields over other government debt, a trade some analysts said could be close to running its course. "The dollar's getting support from Treasury yields," said Ron Simpson, director of currency research at Action Economics in Tampa, Florida. "But we're waiting for U.S. retail sales, CPI and PPI later in the week which may determine the dollar's direction."
Some analysts cautioned that views on the dollar could change, depending on what information is gleaned on Wednesday from the U.S. retail sales report for May. The U.S. producer price index for May will be released on Thursday, with the U.S. consumer price index for May released on Friday. Investors will also be watching the U.S. Treasury's semiannual Report on International Economic and Exchange Rate
Policies on Wednesday, for any comments on China's Yuan. The Yuan on Tuesday posted its largest gain against the dollar since its July 2005 revaluation, rebounding from a three-day slide after the central bank set a much higher reference rate for the Chinese currency. More details, click
The New Zealand dollar was up 0.1 percent though dealers took few big bets after the Reserve Bank of New Zealand intervened in the market and weakened its currency for the first times since the kiwi was floated in 1985. With the focus on yields, sterling rose broadly after Bank of England Governor Mervyn King said UK rates may need to rise again if capacity pressures, pricing intentions and inflation expectations remain elevated. But the pound's gains were capped by slightly softer-than-expected May inflation data.
Gold: U.S. gold futures on Tuesday morning lost some of Monday's gains to profit taking, and what happens at recent lows will be a critical test for the market, traders said. Some players noted that the dollar's persistent strength was undermining Monday's advance, as were losses in crude oil prices. "There's very little happening here. But with the dollar's firmness it's turned into a profit-taking day here (for gold). So the market is continuing the down-slope it started last Wednesday," said one gold broker. Gold future contract is trading around the levels of 651.50$.
U.S. crude oil futures fell more than dollar midday on Tuesday as traders squared books before Wednesday's government petroleum inventory data that's forecast to show gasoline stocks rose for the sixth consecutive week last week. The forecast outweighed earlier news from the Paris-based International Energy Agency, adviser to 26 industrialized nations, which raised its global energy demand growth estimates for this year. "After yesterday's bullish action, markets failed to find any upside follow-through today," said Tom Bentz, BNP Paribas Commodity Futures Inc. Crude Oil future contract is trading around the levels of 65.30$ per barrel.
|
