Broker's Notes: US dollar rose as did gold

US dollar

The US dollar surged higher after U.S. Treasury Secretary Tim Geithner said major currencies were roughly in alignment now, although it later gave back some of its gains. The Wall Street Journal said the comments suggested that Geithner saw no need for the dollar to sink more than it already had against the euro and the yen, but traders pointed out that he did not say that exactly. The dollar rose as far as 81.84 yen from about 81.00 yen before the comments came out and the euro fell 0.6 percent in a matter of minutes as the market, taking the comments to imply that the dollar did not need to fall further against major currencies, covered dollar short positions.

US dollar versus Swiss Franc and Australian dollar

The dollar has fallen to record lows against the Swiss franc, hit parity with the Australian dollar and dropped to 15-year lows against the yen in the past month, driven down by the market in anticipation of more quantitative easing from the Federal Reserve possibly as soon as November. Talk of competitive currency depreciation has flared up ahead of a G20 finance ministers meeting this week and a G20 summit next month, as developed countries keep monetary policy extremely easy to shore up sluggish growth and as capital flows in search of better yields push up currencies in faster growing emerging economies.

Gold

Gold edged up in volatile trade on Thursday as positive economic data from China helped offset pressure from a rebound in the dollar after U.S. Treasury Secretary Tim Geithner defended the beleaguered currency. China's growth ebbed in the third quarter and inflation edged just a touch higher, showing the economy was strong but far from overheating. It also suggested an interest rate rise this week may be enough for now. Festival season in top consumer India is underway, with Dhanteras--the day the jewellers register the highest gold sales in a year--slated for early next month.

Indian rupee

The Indian rupee edged down on Thursday as dollar buying by importers and dollar's strength against majors outweighed the positive push from local share gains and strong Asian currencies. Markets do not expect major foreign fund inflows during the day, which could put downward pressure on the rupee, as the subscription for Coal India's initial public offering closed on Wednesday for institutional investors. State-run Coal India's IPO to raise as much as $3.5 billion was nearly 12 times covered on Wednesday as big investors rushed into the offer during the final hours for institutional orders.

Oil

Oil declined as the dollar strengthened on Thursday after U.S. Treasury Secretary Timothy Geithner said there was no deliberate policy to devalue the currency, while China's economy slowed in the third quarter. Oil swayed from gains to losses early on Thursday as the dollar strengthened from a 15-year low against the yen on speculation about the size and timing of an expected stimulus to the U.S. economy

Source: Richcomm Global Services, DMCC, Dubai