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Business FX Blog

Adam Solomon is a specialist in business foreign exchange issues at foreign exchange brokers TORfx.

The idea of this column is to assist businesses in saving money on making or receiving payments in foreign currency. It is developed with all companies in mind from public companies with large and complex operations, to smaller companies and individuals.

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Home Forex Check Forex Rate Euro advances, crude boosted

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Euro advances, crude boosted PDF Print E-mail
Written by Gary Howes   
Friday, 26 June 2009 09:22
Commodities and Forex Report: We start the morning forex report with a quote from one of our sources at FX Street who says, "Tonight, the Forex marked froze for several minutes as the news of Michael Jackson’s death appeared on the news tickers. In remembrance to the King of Pop, we are listening to his most successful world music album: 'Thriller' at preparing the Daily FX for you."

The sterling dropped against the euro by more than 0.6 % after central bank Governor King said the UK economic recovery will be slow.

“I feel more uncertain now than ever,” said King and “,this is not the pattern of a recession coming into recovery that we have seen since 1930s.”

The OECD however has raised its UK growth forecast for 2010 to “mildly recovery” compared with a previous projection of a 0.2 % contraction.

After a bright start the US dollar surrendered most of its gains against major currencies in the wake of strong demand in the $27bn auction of seven-year Treasury notes, which prompted a decline in US Treasuries yields.

Earlier the greenback had been in demand after the Federal Reserve announced it would not introduce any additional measures to aid credit markets. The Federal Open Market Committee said that it did not intend to make changes to its current plans to buy Treasuries and mortgage-backed assets.

The dollar index, which tracks the value of the US currency against a trade-weighted basket of other currencies, edged lower to close at 80.32 from 80.40 the day before.

The euro advanced to $1.3985 in New York trading from $1.3930 the day before and climbed more than one per cent against the Japanese yen at one point, rising to 134.82 yen, before easing back to 134.09.

Commodities: Nigerian attack boosts oil price


The price of crude was back above $70 a barrel for the first time in a week after a Royal Dutch Shell pipeline in Nigeria was attacked by militants. The Movement for the Emancipation of the Niger Delta (MEND) claimed responsibility for the attack on the pipeline which supplies Shell's Bonny terminal. A spokesman for Shell was unable to confirm whether the attack had caused an interruption to production.

Demand for oil has also been boosted this week by news of refinery problems in Texas, USA. Exxon Mobil has shut a fluid catalytic cracker at its Baytown, Texas, refinery while earlier this week Valero Energy and Marathon Oil suffered power interruptions at their Texas refineries. The Baytown refinery is the largest in the USA and can process more than half a million barrels of oil a day.

Crude oil for August delivery rose $1.56 to $70.23 on the New York Mercantile Exchange, its highest level since 18 June, with the decline in the value of the dollar also contributing to the rise in the price of the black stuff.

The slide in the value of the dollar also made gold a more attractive investment. The August futures contract for gold rose $5.10 to $939.50 an ounce in New York while the spot price rose $6.91 to $938.50 an ounce in London. Dealers said indications that the Federal Reserve intends to keep its key lending rate at its historically low level for an extended period added to the appeal of gold, with some suggesting that China would switch to buying gold bullion in preference to US government debt.

Silver was also in demand, rising more than 13 cents in London trading to just over $14 an ounce, while copper reached its highest level in a week, with the September contract rising 3.5 cents to $2.316 a pound.  
 

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