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Central bank gold sales are bullish again, Sinclair says; Amex lists Seabridge
Tuesday, April 20, 2004
NEW YORK (Dow Jones/AP) -- The dollar jumped across
the board Tuesday, hitting fresh five- month highs
against the euro and Swiss franc, after upbeat
remarks on the economy from Federal Reserve Chairman
Alan Greenspan further fueled speculation about a
Federal Reserve rate hike this summer.
Dallas Fed President Robert McTeer got the ball rolling
in U.S. trading, saying that interest rates could rise
and still be accommodative. Referring to the current 1
percent federal funds rate, McTeer said the level "could
be a bit higher, and policy would still be very
accommodative." Greenspan, in congressional testimony
on banking issues, sent the dollar soaring further, when
he said deflation is "no longer an issue," and pricing
power is picking up.
"Things are changing," Greenspan said, answering
questions before the Senate Banking Committee.
"We evidenced some slowing down in the middle of
the first quarter and it's fairly apparent from the data
since that things have picked up again. March was
a good month, and we moved into April with retail
sales doing reasonably well," he said.
Greenspan's comments gave the dollar a second wind,
while also roiling other financial markets: Treasurys
and equities plunged, gold fell back, and bond yields
soared. The remarks were all the more surprising as
many economists hadn't anticipated Greenspan
veering from the subject of the hearing, which was
banking, particularly as he's set to testify before
Congress on the economic outlook on Wednesday
morning.
"Given the (economic) evidence (Fed officials) have
seen, they have to prepare the market for a
tightening," said Ram Bhagavatula, chief economist
for North America at Royal Bank of Scotland in New
York. "The whole yield curve is up around 50 basis
points this month."
A recent string of surprisingly strong jobs, retail sales,
and inflation data are raising expectations that the
Fed will tighten monetary policy soon. This is seen
as dollar-positive because it would increase the appeal
of dollar-denominated assets to investors.
"I definitely think the dollar is remaining well supported
as interest rate expectations are adjusting in the United
States," said Daniel Katzive, foreign-exchange strategist
at UBS in Stamford, Conn.
In late New York trading, the euro was quoted at
$1.1909, down from $1.2021 late Monday.
The dollar was quoted at 108.38 yen, down from 108.80
yen late Monday.
The dollar was quoted at 1.3075 Swiss francs, up from
1.2900, and 1.3541 Canadian dollars, up from 1.3450.
The British pound fell to $1.7924 from $1.8080.
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