Brokers' notes: Euro falls to its lowest in more than a month; oil falls by $1

UK sterling
Sterling fell against the dollar on Friday, as worried investors sought refuge in safe-haven currencies like the yen and the Swiss Franc on growing worries about a stuttering global recovery. The skittish sentiment would keep the pound under pressure with many expecting Britain itself to grapple with a faltering recovery in coming months. The pound was boosted by strong retail sales numbers on Thursday, but other indicators like business and mortgage lending showed weakness.

Australian dollar
Fresh worries about the US economy gathered ground after numbers on Thursday showed new US jobless claims marked a nine-month high last week, while the Mid-Atlantic manufacturing shrank in August for the first time in more than a year. The data led investors to pare positions in stocks, commodities and growth-related currencies with funds moving to safe-haven assets like government bonds. European stocks fell in early trade, erasing early gains. The Australian dollar fell to a one-month low versus the U.S. dollar on Friday as higher-yielding currencies came under broad pressure due to increasing risk-aversion. The Aussie fell to $0.8846, its lowest level since July 22.

US two-year Treasury note
US two-year note yield slipped to an all-time low in Europe on Friday, while the 10-year yield fell to a fresh 17-month trough as worries about a double-dip recession drove investors to safe-haven government debt. The two-year note yield marked a fresh low at 0.472 per cent, surpassing the previous low around 0.475 percent, while the 10-year yield reached 2.550 percent, edging past Thursday's low of 2.557 per cent.

Euro
The euro fell to its lowest against the dollar in more than a month on Friday after comments by a European Central Bank official bolstered the view that euro zone monetary policy would remain loose for months to come. ECB Governing Council member Axel Weber told Bloomberg news agency that it would be "wise" to extend unlimited liquidity to banks past the end of 2010 and resume discussions to exit loose monetary conditions next year. The comments came after St. Louis Federal Reserve President James Bullard on Thursday said the U.S. central bank may need to ramp up purchases of US Treasuries if price levels in the US economy continue to shows signs of softening. Losses in the euro helped pushed the dollar up 0.7 per cent against a currency basket to a one-month high of 83.161.

Gold
Gold held near $1,230 an ounce on Friday as concern over the outlook for the global economy fuelled interest in the metal as a haven from risk, but gains in the dollar kept the metal in a narrow range. The precious metal rose to a peak of $1,237.15 an ounce on Thursday after weak US jobless and manufacturing data knocked the dollar and boosted interest in assets seen as lower risk. Such fears also led to fresh inflows into the world's largest gold exchange-traded fund, New York's SPDR Gold Trust. The trust's holdings rose nearly 4 tonnes to 1,299.468 tonnes on Thursday, their highest since July 27. On the physical markets, buying continued in India, the biggest global consumer of the precious metal, ahead of a raft of festivals, while a strong baht helped Thai consumers defy a rise in gold prices, dealers said on Friday. Demand for physical gold, especially Asia, usually tails off as prices rise.

Oil
DGCX WTI and Brent crude oil futures fell more than $1 a barrel on Friday, pressured by a stronger dollar and weaker equity markets. DGCX WTI crude prices for September fell $1.15 to $73.28 a barrel by 1031 GMT on expiry day for the contract, after falling the previous two sessions.

Source: Richcomm Global, Dubai; www.richcommglobal.com