|
Forex outlook:
The dollar held near record lows against the Euro on Monday, while the New Zealand currency set multi-decade peaks after strong inflation data boosted expectations of an interest rate hike next week. The Dollar is trading around the levels of 1.3785 against the Euro, around the levels of 121.92 against the levels of 2.0370 against the sterling.
The dollar has also been weighed down by concerns that troubles in the U.S. sub prime mortgage market, which caters to borrowers with a troubled credit history, could spill over into slower economic growth and thus prompt Fed rate cuts.
New Zealand's consumer prices rose more than expected in the second quarter, prompting markets to price in a rate hike to 8.25 percent as soon as next week and boosting the kiwi -- already the highest yielder in the industrialized world. "The kiwi is rallying fairly strongly on the back of the market increasingly pricing in a risk of a rate hike next week and dragging the Aussie up with it," Adam Cole, senior currency strategist at RBC Capital Markets.
Sterling held steady against the dollar and Euro on Monday, within sight of last week's highs against the greenback on the view rising UK interest rates will continue to burnish its appeal to investors. The pound sailed above $2.03 last week to its highest level in over quarter of a century, as worries about the weakness in the U.S. sub-prime mortgage and credit markets spreading to the wider economy battered dollar sentiment. Data on Tuesday are expected to show UK inflation easing in June for a third straight month, but remaining above the Bank's 2.0 percent target, and the minutes on Wednesday from the BoE's policy meeting earlier this month are expected to show a 6-3 vote to increase rates to 5.75 percent.
Investors are awaiting U.S. inflation data and Congressional testimony by Federal Reserve Chairman Ben Bernanke later this week for a further steer on the U.S. monetary policy outlook.
Gold: Gold held steady on Monday and was within sight of a five-week high hit last week but overall trading was sluggish in the absence of Japanese investors. Other precious metals were mostly higher, with silver hovering near Friday's three-week highs. The physical sector saw light buying from Thailand on the back of a strong baht. The gold future contract is trading around the levels of 668.204 per once.
Crude Oil: U.S. crude for August delivery was 6 cents higher at $73.99 a barrel -- a fresh 11-month high and getting nearer the record high of $78.40 set in July 2006. Analysts and traders said oil prices are likely to creep higher on bullish demand sentiment and as political tensions in major producers Iran and Nigeria continue to persist. "The markets will retain focus on North Sea production problems and refinery outages in the week ahead. These factors will continue to support prices at the current levels," said David Moore, a commodities analyst at Commonwealth Bank of Australia. Crude Oil future contract is trading around the levels of 74.400$ per barrel.
|
