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Forex outlook:
The dollar advanced to a seven-week high against the Euro fallowing minutes from the Federal Reserve's May 9 meeting that showed policy makers saw inflation as the ``predominant'' concern for the economy. The dollar briefly pared gains earlier after a private report showed companies added fewer jobs last month than economists forecast. The U.S. currency gained 0.2 percent to $1.3417, after earlier reaching $1.3407, the strongest since April 10. It has rebounded from a record low of $1.3681 set April 27.However the Euro declines may be limited after the ECB council member Nicholas Garganas said the central bank will probably raise its inflation forecast next month and is keeping options ``open'' on rate increases after June.
The yen rose from a record low versus the Euro after Chinese stocks slumped and investors sold emerging-market assets bought with money borrowed in Japan. ``The decline in stocks triggered some correction in the yen carry trades,'' said Dixon Fung, a currency trader at MG Financial Group in New York. ``But the episode won't last long. The yen will remain weak until the Bank of Japan does something about interest rates.'' The Japanese currency rallied 0.3 percent to 163.05 per euro at 2:14 p.m. in New York, from yesterday's record low of 164.29. The yen climbed 0.1 percent to 121.49 per dollar.
Gold: The precious metal fell on speculation the U.S. Federal Reserve won't cut interest rates anytime soon, strengthening the dollar and reducing the appeal of the gold as an alternative investment. ``The market is beginning to realize the Fed is not going to lower rates,'' said Leonard Kaplan, president of Prospector Asset Management in Evanston, Illinois. ``The dollar then goes up and gold goes down.'' Gold supply will exceed demand by 250 metric tons this year, a bigger surplus than forecast in October, London-based research company Virtual Metals said yesterday. ``This is no small number,'' Jon Nadler, an investment- products analyst at Montreal-based Kitco Minerals & Metals Co., said in an e-mail. The future contract for Jun on gold is currently traded around the 653$ an ounce.
Crude Oil: The black gold rose amid speculation that an expected increase in gasoline stockpiles won't be large enough to reduce a supply deficit. ``We've already priced in a build in gasoline supplies,'' said Tim Evans, an energy analyst with Citigroup Global Markets Inc. in New York. ``The build will have to be substantially larger than expected in order for gasoline to extend its decline.'' Crude oil for July delivery rose 32 cents, or 0.5 percent, to $63.47 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. The crude oil and gasoline inventories are due to be release at 14:30 (GMT).
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