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Forex outlook:
Strong data on the U.S housing market strengthen the Dollar to the highest level in six weeks against the Euro. The investors reduced expectation of an interest rate cut by the fed this year. ``The housing data is giving the dollar a bit of a boost, though it is mainly due to the drop in housing prices, and you are seeing buying on a huge dip,'' said Robert Fullem, vice president of U.S. corporate currency sales at Bank of Tokyo- Mitsubishi UFJ Ltd. in New York. ``Data from the U.S. over the past few weeks have been pretty solid. Recession is pretty much out of the picture.'' The U.S. currency was at $1.3437 against the Euro at 1:07 p.m. in New York, from $1.3459 yesterday. It earlier touched $1.3415, the strongest since $1.3408 on April 11. The dollar pared its losses and traded at 121.38 yen, from 121.66
The minutes of May BOE interest rate meeting that showed an unanimously vote to raise the benchmark rate and a twelve year record high in the manufacturing price index spur speculation for tow more raises in the benchmark rate. ``Markets may price in more hikes, the next one in the third quarter and one in the fourth quarter,'' said Armin Mekelburg, a Munich-based currency strategist at UniCredit Markets & Investment Banking. ``We might see more sterling strength in the short term.'' Against the euro, the pound rose to 67.66 pence by 5:14 p.m. in London, near a month-high, from 67.75 pence yesterday. The pound was little changed against the dollar at $1.9854, from $1.9866 yesterday, when it rose to the strongest since May 10. The traders will eye the GDP due at 08:30 (GMT) a strong data may give a strong support to the up trend of the Pound.
Gold: the precious metal fell to a two-month low as a gain in the value of the dollar reduced demand for the gold as an alternative investment. Gold futures for June delivery fell $9.30, or 1.4 percent, to $653.30 an ounce on the Comex division of the New York Mercantile Exchange, the lowest closing price since March 15. It was the biggest percentage drop since May 16. ``Gold seems to be struggling and the technical picture has weakened in the past couple of weeks,'' said William O'Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey. ``A lack of alternative asset demand for gold has been a negative.''
Crude Oil: plunged in New York due to refinery shutdowns that may increase the glut of oil at Cushing, Oklahoma, the delivery point used for benchmark futures. London-traded Brent crude, traditionally cheaper, now costs $6.54 a barrel more than New York oil, a record premium. Brent is rising on concern that supply from Nigeria or Iran may be disrupted. A government report yesterday showed the surplus of West Texas Intermediate crude stored at Cushing is growing. Crude for July delivery fell $1.59, or 2.4 percent, to settle at $64.18 a barrel at 2:43 p.m. on the New York Mercantile Exchange. It was the biggest one-day decline since April 9. Brent for July rose 12 cents to $70.72 on the London-based ICE Futures exchange, its highest close since Aug. 28. ``The risks in Nigeria and Iran are pushing Brent higher,'' said James Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois. ``The Brent supply picture is much tighter than at Cushing.''
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