Dutch finance minister''s comments give euro another boost

Section:

By Steven Vames
Dow Jones Newswires
Monday, December 27, 2004

http://sg.biz.yahoo.com/041226/15/3phy0.html

NEW YORK -- With conditions in currency markets
already thin, whatever trading takes places during the
final week of 2004 is likely to be choppy and volatile
for the dollar.

The euro pushed to yet another all-time peak versus
the dollar Thursday, reaching briefly above the key
$1.35 level to go as high as $1.3506. The U.S.
currency also fell broadly versus other currencies to
cap off a mostly losing week in which the yen and
Swiss franc traded toward the tops of their recent
ranges. Late afternoon Thursday, the euro was at
$1.3495, up from $1.3389 late Wednesday. The
dollar was at Y103.72, down from Y104.09 and at
CHF1.1440, down from CHF1.1525. The pound
was at $1.9203, up from $1.9139.

Though there are still five days of trading remaining
in 2004, the drop to new lows seemed to reinforce
the notion that any significant year-end dollar
rebound isn't going to materialize.

Liquidity tends to dry up at the end of every year
because most institutions have closed their books
on currency trading by mid-December. The resulting
low volumes provide short-term speculators an
opportunity to jockey for positions in an almost
empty field, which often leads to exaggerated
intraday movements.

But underlying the customary lull this year is an
active trend lower for the dollar, and the lack of
market participation is serving to boost the price
influence of those who want to continue selling
the dollar.

"The market is still focused on structural
imbalances for the U.S. economy and the
potential for further dollar declines," said Todd
Elmer, foreign exchange strategist at Barclays
Capital in New York. "We still have people
wanting to put on dollar shorts and those trades
are being exaggerated by low liquidity," he added.

This week is likely to hold more of the same:
choppy, unpredictable trading with the risk that
the dollar will continue falling, said Elmer.

In recent weeks, many traders had suggested that
the dollar was heading toward a year-end bounce,
as firms closed out short-dollar positions to book
profits.

However, even a partial dollar recovery proved
elusive. Data last week from the Commodity
Futures Trading Commission showed that
speculators had largely closed out their short-dollar
positions in year-end profit taking without creating
a significant rebound for the U.S. currency.

But by taking profits, traders were also setting the
stage for a new assault on the dollar next year,
since they will have to sell dollars again to build
back their bearish positions, according to analysts.

Further dollar declines next week, if markets appear
disorderly, could also raise the volume of rhetoric
from European and Japanese policymakers, who
have recently expressed displeasure with their
respective currencies' strength.

Likewise, there are some analysts who have raised
the possibility that Jan. 1 could see a move by the
People's Bank of China to change its currency policy.
The most likely scenarios would be to widen the
trading band for the yuan, which is effectively
pegged to the dollar at CNY8.2770, or an outright
revaluation the currency.

Though most analysts don't agree that China will
move that soon, speculation along those lines could
pressure the dollar versus other Asian currencies
as the week wears on. The logic, according to
traders, is that more flexibility on China's part will
lead to wider flexibility across Asia, and could lead
to a broadly weaker dollar versus many Asian
currencies.

Some of the most active trading last week was in the
pound versus the euro and dollar. The U.K. economy
projected a string of bad news on the pound last
week, including a report of slipping home prices, a
perceived decline in the likelihood of Bank of
England interest rate hikes, and a growing current
account deficit.

Traders have seen the news -- and the sharp moves
lower in the pound -- as an ominous sign.

"The slowdown in the fundamental outlook in the U.K.,
especially on the domestic side of the economy,
together with the anticipated increase in speculation
that the BoE will start to ease policy again will likely
turn sterling from an outperforming position seen in
2004 to an underperformer in 2005," said Ian
Stannard, senior foreign exchange analyst at BNP
Paribas in London.

There will be little new U.K. economic data this week,
but the pressure on the pound could continue,
Stannard added.

In the U.S., however, data will likely play only a
marginal role in trading, with few reports of
consequence. On Tuesday, the Conference Board's
consumer confidence index is expected to have risen
to 94.6 in December from 90.5 in November.

On Wednesday, existing home sales for November
are expected to have risen to 6.8 million from 6.75
million in October. On Thursday, the Chicago
Purchasing Management Index is expected to have
slipped to 63 in December from 65.2 in November.

----------------------------------------------------

To subscribe to GATA's dispatches, send an e-mail to:

gata-subscribe@yahoogroups.com

To unsubscribe, send an e-mail to:

gata-unsubscribe@yahoogroups.com

----------------------------------------------------

RECOMMENDED INTERNET SITES
FOR DAILY MONITORING OF GOLD
AND PRECIOUS METALS
NEWS AND ANALYSIS

Free sites:

http://www.jsmineset.com

http://www.cbs.marketwatch.com

http://www.mineweb.com/

http://www.gold-eagle.com/

http://www.kitco.com/

http://www.usagold.com/

http://www.GoldSeek.com/

http://www.GoldReview.com/

http://www.capitalupdates.com/

http://www.DailyReckoning.com

http://www.goldenbar.com/

http://www.silver-investor.com

http://www.thebulliondesk.com/

http://www.sharelynx.com/

http://www.mininglife.com/

http://www.financialsense.com

http://www.goldensextant.com

http://www.goldismoney.info/index.html

http://www.howestreet.com

http://www.depression2.tv

http://www.moneyfiles.org/

http://www.howestreet.com

http://www.minersmanual.com/minernews.html

http://www.a1-guide-to-gold-investments.com/euro-vs-dollar.html

http://www.goldcolony.com

http://www.miningstocks.com

http://www.mineralstox.com

http://www.freemarketnews.com

http://www.321gold.com

http://www.SilverSeek.com

http://www.investmentrarities.com

http://www.kuik.com/KH/KH.html
(Korelin Business Report -- audio)

http://www.plata.com.mx/plata/home.htm
(In Spanish)
http://www.plata.com.mx/plata/plata/english.htm
(In English)

http://www.resourceinvestor.com

http://www.miningmx.com

http://www.prudentbear.com

Subscription sites:

http://www.lemetropolecafe.com/

http://www.goldinsider.com/

http://www.hsletter.com

http://www.interventionalanalysis.com

http://www.investmentindicators.com/

Eagle Ranch discussion site:

http://os2eagle.net/checksum.htm

Ted Butler silver commentary archive:

http://www.investmentrarities.com/

----------------------------------------------------

COIN AND PRECIOUS METALS DEALERS
WHO HAVE SUPPORTED GATA
AND BEEN RECOMMENDED
BY OUR MEMBERS

Blanchard & Co. Inc.
909 Poydras St., Suite 1900
New Orleans, Louisiana 70112
888-413-4653
http://www.blanchardonline.com

Centennial Precious Metals
3033 East First Ave., Suite 807
Denver, Colorado 80206
1-800-869-5115
http://www.USAGOLD.com
Michael Kosares, Proprietor
cpm@usagold.com

Colorado Gold
222 South 5th St.
Montrose, Colorado 81401
www.ColoradoGold.com
Don Stott, Proprietor
1-888-786-8822
Gold@gwe.net

El Dorado Discount Gold
Box 11296
Glendale, Arizona 85316
http://www.eldoradogold.net
Harvey Gordin, President
Office: 623-434-3322
Mobile: 602-228-8203
harvey@eldoradogold.net

Investment Rarities Inc.
7850 Metro Parkway
Minneapolis, Minnesota 55425
http://www.gloomdoom.com
Greg Westgaard, Sales Manager
1-800-328-1860, Ext. 8889
gwestgaard@investmentrarities.com

Kitco
178 West Service Road
Champlain, N.Y. 12919
Toll Free:1-877-775-4826
Fax: 518-298-3457
and
620 Cathcart, Suite 900
Montreal, Quebec H3B 1M1
Canada
Toll-free:1-800-363-7053
Fax: 514-875-6484
http://www.kitco.com

Lee Certified Coins
P.O. Box 1045
454 Daniel Webster Highway
Merrimack, New Hampshire 03054
www.certifiedcoins.com
Ed Lee, Proprietor
1-800-835-6000
leecoins@aol.com

Miles Franklin Ltd.
3015 Ottawa Ave. South
St. Louis Park, Minn. 55416
1-800-822-8080 / 952-929-1129
fax: 952-925-0143
http://www.milesfranklin.com
Contacts: David Schectman,
Andy Schectman, and Bob Sichel

Missouri Coin Co.
11742 Manchester Road
St. Louis, MO 63131-4614
info@mocoin.com
314-965-9797
1-800-280-9797
http://www.mocoin.com

Resource Consultants Inc.
6139 South Rural Road
Suite 103
Tempe, Arizona 85283-2929
Pat Gorman, Proprietor
1-800-494-4149, 480-820-5877
Metalguys@aol.com

Swiss America Trading Corp.
15018 North Tatum Blvd.
Phoenix, Arizona 85032
http://www.swissamerica.com
Dr. Fred I. Goldstein, Senior Broker
1-800-BUY-COIN
FiGoldstein@swissamerica.com

----------------------------------------------------

HOW TO HELP GATA

If you benefit from GATA's dispatches, please
consider making a financial contribution to
GATA. We welcome contributions as follows.

By check:

Gold Anti-Trust Action Committee Inc.
c/o Chris Powell, Secretary/Treasurer
7 Villa Louisa Road
Manchester, CT 06043-7541
USA

By credit card (MasterCard, Visa, and
Discover) over the Internet:

http://www.gata.org/creditcard.html

By GoldMoney:

http://www.GoldMoney.com
Gold Anti-Trust Action Committee Inc.
Holding number 50-08-58-L

Donors of $750 or more will, upon request,
be sent a print of Alain Despert's colorful
painting symbolizing our cause, titled "GATA."

Donors of $200 or more will receive a copy
of "The ABCs of Gold Investing" by Michael
Kosares, proprietor of Centennial Precious
Metals in Denver, Colorado.

GATA is a civil rights and educational
organization under the U.S. Internal Revenue
Code and contributions to it are tax-deductible
in the United States.