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Forex outlook:
The dollar was little changed against the Euro on Thursday, trading just above an all-time low, as concerns about the U.S. housing market and its impact on consumers continued to sour investors on the greenback.
A second day of testimony from Federal Reserve Chairman Ben Bernanke provided added ammunition for dollar bears when he told the Senate Banking Committee that losses on sub prime mortgages could hit $100 billion and curb consumer spending.
Bernanke began his semi-annual testimony on Wednesday, when he announced the Fed had trimmed growth forecasts for this year and next but reiterated that inflation is its top concern. Markets interpreted that to mean the Fed probably won't cut interest rates this year despite a deepening housing slump, but that hasn't provided much boost for the dollar. The underlying concern is still about housing, and the market just doesn't want to let go of that concern right now," said Samarjit Shankar, director of global FX strategy at Mellon Financial Corp. in Boston.
The dollar was trading around the levels of 1.3805 vs. the Euro, 122.05 vs. the yen and 2.0485 against at 19:05(GMT).
Crude Oil: U.S. crude oil futures trimmed gains in late morning trading Thursday as gasoline futures retreated on profit-taking after jumping more than 4 percent on Wednesday on a surprise inventory drawdown. Earlier, crude prices rose after a force majeure was declared on exports by French oil company Total due to an offshore platform glitch in Angola and strong economic news from China. The August crude traded around the levels of 75.650 at 18:15 (GMT). The early intraday peak was the highest since futures reached $76.52 on Aug 2007. The market has hit some profit taking off the recent strength, the fresh 11-month high," said Eric Wittenauer, analyst at A.G. Edwards. "It's being accelerated by the gasoline (RBOB) decline which has underpinned the market."
Gold: The precious metal rose on a weak dollar and rising oil prices. The gold is used as an alternative investment to the dollar and due to the current weakness of the greenback vs. the Euro the investors turn to the precious metal. The high energy prices are bringing inflation concern to the front stage and raising the appeal of the gold that is used as a hedge against inflation. The Jul gold traded around the levels of 678.3$ an ounce at 18.40(GMT). A break of the 685$ resistance will signal a challenge toward the important 700$ psychological barrier.
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