How Did The G-7 Meeting Negatively Affect The US Dollar?
The dollar continued its
descent as Treasury prices continued their climb today.
Equities
A cautious second quarter outlook from Dell and
an unexpected 6.8% decline in housing starts dictated the weak tone for today’s
trading session, despite a bigger than expected jump in consumer sentiment. The Nasdaq
futures contract
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down by 2.600 to finish at 943.700,
and the Dow
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finish at 8668.
Fixed Income
Today’s lower than expected CPI data fueled
further treasury price gains, and the market has now virtually priced inflation
risk out Treasuries. Parenthetically, Bill Gross has been buying inflation
indexed treasuries over the past few days, betting that prices in the economy
are sure to pick up in upcoming quarters while rates remain steady. The 10-year futures contract
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up 195 to close at 118-010; the 30-year
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was up 27 at 119-08; and the five-year note was up 140 at 115-195
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Metals
Gold reestablished its negative correlation to
the US dollar (which has been -.92 since early April) today and finished
higher on the back of heavy dollar selling. The yellow metal was up 2.10 to close at 354.9
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and
silver
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continues to hold on to this week’s solid gains as the economic fallout from SARS has not affected Chinese demand the way short-sellers initially predicted.
The July copper contract was up .05 to close at 76.15
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back above its 40-day moving average. Aluminum
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today after a weaker than expected housing starts number caused the market to
question the sustainability of domestic demand for the metal. As a result, the
June contract was down .0035 to close at .6525.
Energy
Crude oil prices popped higher today after Royal
Dutch Shell announced that its oil shipments from Nigeria would be interrupted
until June 4. This is the second time since March that clashes between Niger
River delta locals and the Nigerian government have crimped crude production
from the world’s sixth largest oil supplier. June crude was up .42 to
close at 29.14
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losses as late session buying brought the commodity closer to where it opened.
The June contract finished down a slight .09 to
close at 6.122
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Currencies
The currency markets were preoccupied with
Today’s G-7 meeting today in France. And after a joint communiqué issued by the
participating countries failed to mention any concern about the US dollar’s
weakness, market participants decided to punish the greenback across the board. The USD index
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down by 1.23 and
finished at 94.18.