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With traders locking in profit from the remarkable gains by dollar in last few weeks, Thursday saw the currency slipping down the board. As the dollar slipped, investors anticipated interest rate judgments by European Central Bank and Bank of England.

On Wednesday Euro touched an eight month low, as the US currency positioned itself to smash a five-day winning line. After the rate pronouncement, traders were left to anticipate any comments from Jean-Claude Trichet, the ECB president.

The rates are being left unchanged by ECB at 4.25 percent. While re-leaping collateral regulations, it is being anticipated that ECB might issue new set of financial or economical projections. The rate announcement is expected to come at 1145 GMT prior to a news conference of Jean-Claude Trichet.

Analysts and experts are expecting Jean-Claude to steady his acknowledgment slow and lower growth with a strict and sturdy attitude on the consequences of knock-on price rise.
Strategist at RBS Global Banking, Paul Robson, said that people hoping that Jean-Claude would maintain his tough attitude. He said that the new collateral regulations as well as the higher inflation outlook and descending growth prediction is expected to offered mixture of policy issues for the market and experts to think over, which might add to instability of euro.

Robson also added that the day of unchanged rates in UK and euroland could prove to be a remarkable one with the press conference of ECB. Rate decisions from central bank became the theme for the day, as Riksbank of Sweden raised the rates to 4.75 percent by 25 basis points in highly anticipated decision. But with a prediction of a fall in borrowing costs in upcoming weeks has put Sweden under a pressure of selling.

The European currency rose to $1.4510 as it pulled back from the previous day’s hit of $1.4384, a 0.1 percent of rise since January, where as the dollar was found moving up as it touched 108.50 yen.

With a 0.4 percent of increase in oil prices, the currency of US was weighed down as the dollar index .DXY skidded to 0.1 percent. The fall in oil prices is recovering from a fall of 9 percent so far in the current week.

Prior to any holding of rates by BoE at 5 percent, Sterling moved up to $1.7820 with a rise in 0.4 percent. But in order to support weak economy there is expected a cut in the works. On Wednesday, the anticipation of cut has pushed the currency of UK to a two and half year low.

Following an announcement from Riksbank, euro moved up to 9.4761 with a 0.2 percent rise.

Reserve Bank of India has cashed huge surplus on weak rupee. To stay steady in foreign exchange market, RBI sold a part of Forex reserves.

RBI has witnessed an increase in its growth by 45% for year 2007-2008 from foreign exchange market. The record growth is assisted with a record Rs 15,011 crore surpluses transferred to the government, whose accounting year finished in the June of 2008.

The total income of central bank rose 41 percent more, as it saw the growth of income from initial amount of 41,039.73 crore (the profit earned by the sale of SBI shares is excluded) to Rs 57,750 crore in the year 2007-2008. Central bank’s major source of income is foreign exchange operations, capital gains/losses on foreign currency securities, discounts gains/losses in Forex trading, and comprising interest.

With 90 percent of Reserve Bank of India’s income being generated from foreign exchange, the financial year of 2007 saw an increase in foreign sources as it went soaring from Rs 35,152.99 crore to Rs 51,883.27 crore.

Another area of profit used by central bank was the sale of dollar since the beginning of April, when dollar reached higher level of price from the level it was brought, which benefited the bank a lot. Reserve management strategy of the bank for the year included a prominent feature where it pulled out of deposits with reign commercial banks those hit by sub-prime emergency.

Since central bank has been lending to banks suffering tight cash situations on regular basis, it is expected of it to profit from hike in repo rate in the existing year. The cash situation of many banks has been stiffening up due to a hike in reserve requirements (CRR) by the central bank, which is a part or amount of deposits with the Reserve Bank of India. The funds or amount of money parked with central bank as CRR does not provides any interest rates to banks.

With the end of august, International reserve of Indonesia has fallen to $58.4 billion from last month’s status of $60.56 billion. According the deputy governor, the fall in the reserve is a result of efforts shown by central bank to steady Rupiah.

It is estimated by the dealers of foreign exchange that the central bank has sold a significant amount of dollars in order to improve the condition of Rupiah. The step has been taken to boost the currency in its efforts low down the increasing pressure because of the imported materials and goods.

After hitting a two year high of 11.9 percent in the month of July, the inflation suddenly came down to 11.85 percent in the month of august.

Budi Mulya, Bank Indonesia Deputy Governor, did not give any details on his citing of reason behind the fall. He cited debt repayments and Rupiah stabilization among significant factors causing the fall.

On Monday, euro chops down to its lowest and weakest in 11 months against dollar with dollar continuing to avail from takeover of mortgage lenders, Fannie Mae and Freddie Mac, by government of United States.

Lowest since October 2007, euro was cited $1.4119 with its last trade of the day being 0.9 percent down at $1.4136.

Director of foreign exchange trading at Scotia Capital in Toronto, Steven Butler, said that investors have got more incentive for buying dollar as compared to euro, with the takeover of the two mortgage companies Fannie and Freddie by the government of United States.

United Dollar extended losses against yen, with Lehman brothers shares thrusting concerns about ability of investment bank to raise funds in the midst anticipation of bigger losses.

Dollar was last recorded 0.8 percent down at 107.48 yen close to a low of 107.26 yen. A fall of more than 31 percent by Lehman shares effected stocks of Wall Street, as it moved down.

Currency trader at Tempus Consulting in Washington, Greg Salvaggio, reports concerning Lehman dropped dollars and stocks down.

On Tuesday the European stock markets closed with Euro by and large firmer. Following heavy losses on Wall Street on Monday the dealers were of the view that the shares had slipped down. According to the data available from America it somehow managed to provide a breather as the economy eventually getting to stabilize and the losses of billions of dollars in the banks due to the subprime crisis of home loan.

It assisted in the offset reviews which projected the confidence shown by the consumers in Germany which is the eurozone largest economy were vanishing very quickly following the output reduced in the second quarter. The FTSE index crashed down 0.62 percent to 5469.70 points. In Paris the Cac 40 increased 0.28 percent to 4367.55 points and in Frankfurt the Dax added 0.68 percent to 6339.52 points.

The top most eurozone company’s Euro Stoxx 50 index gained 0.51 percent. London managed to buck the firmer style where the FTSE 100 index down 0.62 percent to 5469.70.

London buck the firmer trend, with the FTSE 100 index down 0.63 percent to 5470.70 points. In Paris, the Cac 40 rose 0.29 percent to 4368.55 points and in Frankfurt the Dax added 0.69 percent to 6340.52 points. The Euro Stoxx 50 index of leading eurozone companies gained 0.52 percent. London bucked the firmer trend, with the FTSE 100 index down 0.63 percent to 5470.70 points. In Paris, the Cac 40 rose 0.29 percent to 4368.55 points and in Frankfurt the Dax added 0.69 percent to 6340.52 points. The Euro Stoxx 50 index of leading eurozone companies gained 0.52 percent.

It was noticed that during the Asian trading, the Euro after witnessing a fall under 1.4699 went up to over 1.4743. Due to the depression and falling prices of the oil EURUSD crashed down at approximately 100bps. Overturning of the crude prices would easily bring about a scenario where the Euro will be looking for wiping out its previous losses.

With the economic recession continues to take place there are chances that Euro might be trading heavy all through the week. The final reading of Germany’s GDP 2Q will probably get modified lesser which will show growth contracted in the biggest economy in Europe. If the situation still persisted where Germany’s IFO continuously slide downwards then there are probabilities that we could witness the pair facing the lows of the year.

Before the prices of the oil pushes the GBPUSD back to over 1.8488 in the previous trading just breaking under 1.8398 price level, the Pound witnessed same price war where the Euro dropping over 100bps. In the second quarter with the growth has risen considerably and it has also raised the anticipation that at the end of the year the BoE will be decreasing the rates. The Sterling has gone down through majority of the support levels.

Expressing his views in a speech in Osaka, Masaaki Shirakawa Governor of BoJ said, the present rates of interests are accommodative and the economy of Japan is not likely had to go through an adjustment stage. Subsequently when the trend line support will be found then all through the week we can witness the high pair trading particularly if finally there is a decision taken to the GSE issues.

Believing in the headlines of Freddie Mac and Fannie Mae’s issues, the dealers will be diverting their attention towards the housing data. Bouncing back to in home sales, it could endow the investors with a hope the market of the housing is turning.

On a stronger dollar the prices for the oil witnessed a downfall and talks have been conducted on the rising oil prices. On the other hand the price for gas is witnessing a constant rise leaving behind the $4 mark. After Mr. Paulson who is the Treasury Secretary gave a comment that he is not denying the interference to make the American currency steady the dollar witnessed an improvement as compared to the euro.

Seeing the rising prices of the oil all the countries engaged in producing oil were called for a meeting by Saudi Arabia. One of the Saudi minister said that they will be working along with OPEC for the supply of the oil in the present times and in the near future also. He went to add that the current rise in the price is groundless.

On New York Mercantile Exchange the price of the crude crashed down $4.19 to stop at $13.44 a barrel. It was on Friday that the oil witnessed a record breaking rise of more than $9 in just one day, but on the other hand the gas didn’t stopped and kept on rising. According to Oil Price Information Service and AAA the average price of the gallon across the nation rose by more than 1.6 cents and reached to $4.021. Even though some parts of the country paid the price for weeks now but it was on Sunday that average crossed $4.

Mr. Tom who is a chief oil analyst and publisher at Oil Price Information Service in Wall, New Jersey was of the view that if the oil stayed near $138 a barrel you can still expect the gas prices to rise in the coming days. According to a spokesman of AAA the prices will still rise to 2 to 3 cents. With the gas prices going up where some of the drivers have cut back on the other hand the gas producers will have to raise the prices seeing the prices of the crude oil also increasing.

The rise in the gas prices has already made the drivers to change the type of cars they used to drive or they are planning to buy. Seeing all this General Motors has also made an announcement last week that that they will be shutting down their four units engaged in producing pick-up trucks and SUVs.

It will be really a costly affair if you have a SUV which costs around $90 to fill it up not to mention if you have to pick and drop your kids to school. Around Memorial Day the prices of the gas often witness a raise and then move back in the summer time. After last week when Mr. Trichet who is the President of European Central Bank made a comment on the rising interest rates in the month of July to face price rises the sharp rise was witnessed. This made the euro to easily rise against the dollar.

In an interview Mr. Paulson said that he don’t deny the fact that they are interfering to make the dollar stable but he refused to make any comment on what will be the government reaction towards this issue. Mr. Paulson’s comments made an impact on the euro to decrease sending oil crashing down.

EURUSD has reached to new heights as the pair will be reaching the landmark of around 1.5298. It is a big step when it is compared to the sudden price change where the dollar was struggling for its re-existence. The start of New York’s session quickly overcome with this attempt when it was realized the economic records generated fear that the consumer sector is no more concerned with the employment.

The American labor market data of February has really affected the report of Friday’s non-farm payroll. The reduction in the jobs was more than eleven percent and it showed that the working staff is not reduced by the companies. The fact cannot be denied that products those are related to the service segment witnessed a layoff as the government and non-profit organizations showed a rush.

It was not at all expected that the report of ADP employment will register a downfall of more than twenty thousand and it is the worst reading since June in 2003. It was evident that the goods and services segment witnessed considerable losses. The service segment to employ new employees but it is making progress at a very slow speed. It does not promise the employment of ISM non-manufacturing index and not for the NFP release on Friday.

The reduction in the employment will only add on to the already worsened American economy. ISM manufacturing gauge recorded the downfall that is the worse in the previous four years and the service segment reported deeper concerns. The print of 49.3 was registered a two point high than the standard point of around 4.6, this is a improvement as compared to the readings of the month of January which is known as the worst reading since 2001.

The world’s biggest economy is in depression and they are just waiting for a word from government’s GDP. After the ISM report came there were certain developments made while some of the developments were reducing. A significant development was detected in the business. This shift is suggestive of the inventory in the same period and the readings of the new orders and the employment were also reducing and not at al impressive.

It was a sudden surprise that the export orders shot down to more than 45 percent and the new dollar provided the reduction to the foreign consumers. Now when EURUSD has been making indecisive moves in getting further to the mark of 1.5298, the basics offer to additional worsening of the American dollar. The experts are not denying the fact for making further developments in the same area that the basics are also favorable. 

After the rate cuts by the Fed, the prices of gold are touching the sky. It has become one of the most valuable assets after the U.S dollar. As the U.S dollar is already weakening and the prices of other commodities also falling, Gold is the only metal that is going strong. Also, the dollar index, which tracks the performance of the greenback against six other major currencies, declined 0.6% at 75.125.

Gold futures set a new record $942.20 an ounce on Wednesday, when the Federal Reserve had cut the fed funds rate by 50 basis points to 3.0%. This shows that the Federal Reserve is open for more cuts, indicating it’s concerned about the economic outlook.

With the love season in full swing, people are likely to purchase Gold for their loved ones. The owners of the Gold Companies like D’damas have confirmed that they are expecting a surge in the jewllery sales during Valentine’s Day season by 17-18% this year. This is not restricted to just India but overseas as well.

People are attracted for buying more of gold because it is seen as an alternative asset against U.S dollar. And, in the present circumstances, where dollar is facing a slump, bullion is ready to take its place without any deliberate effort. People see it as a safe and secure investment.

Inflation and improbability require insurance. Gold is an insurance against all odds. If you possess gold, it is considered as a safe option. Even if its prices go down, you don’t need to dispose it off because it is bound to rise again. And you can then make a profit by selling it at a higher price.

On the other hand, the demand of Gold has suffered due to lower imports amid high prices. The reason being that the U.S economy is seeing a set back.

The future of Gold also lays in the hands of the US CPI inflation data, which will determine the change in prices. If the dollar still goes down, then gold is likely to be benefited and will rule the market.

In addition, the prices of the base metals and oil are also lower comparatively. Platinum stands at 1783, while Palladium at 421. Silver went down at 16.76. Gold being at the zenith, 904.

Bullion is rocking and is meant to reign unless the dollar makes a comeback. So, buy Gold  and play safe.