Does The US Really Want A Weaker Dollar?
Equities experienced a healthy
pullback today despite any significant fundamental data, while the US dollar hit
an all-time low against the euro after Treasury secretary Snow made some
provocative comments about the currency over the weekend.
Equities
Into the third month of an upturn, the market
experienced a healthy pullback today, which many market participants are
blaming on the weak dollar. Drug stocks fell across the board after the
Supreme Court ruled that Maine is entitled to begin a program that forces drug
makers to finance discounts for the uninsured. Retail stocks were impacted by
disappointing sales from Lowes Corp. The Nasdaq futures contract
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down 42.50 to close at 1114.50. The S&P 500 contract
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down by 21.60 to finish at 922.70,
and the Dow
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Fixed Income
Although Treasuries finished higher for the day,
their strength was somewhat muted by the weakness in the US dollar, as the
market fretted that foreigners, who own 45% of the US bond market, would begin
to liquidate their holdings. The 10-year futures contract
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50 to close at 118-060; the 30-year
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was down a slight 07 at 119-01; and the five-year note was up 45 at 115-24
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Metals
Gold had its biggest gain in nine months in
response to continued dollar weakness and an increase in terrorist activity
over the weekend. The July contract was up 9.50 to close at 364.4
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and
silver
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higher as a result of a weaker dollar, but demand came from foreign physical
purchasers, as opposed to investors/speculators. Copper was up .20 to close at
76.35
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Energy
Crude oil prices were lower today after the
Venezuela’s OPEC representative stated that oil was now trading within the
cartel’s price target. June crude was down .31 to
close at 28.83
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close at 6.015
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Currencies
The greenback hit an all-time low against the
euro today after Treasury secretary Snow’s comments over the weekend that the
US government no longer measures the currency’s strength by its market value
were interpreted to mean that the Administration no supports a strong dollar
policy. But a press release from the White House today reaffirming its
commitment to a strong dollar suggest that Mr. Snow was a bit careless with his
choice of words. The USD index
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finished at 93.90.