Gold climbs and euro hits a 10-month high against yen

Gold

Gold inched up on Thursday and was on track for its 10th consecutive quarterly rise since 2008 as an early drop spurred cautious bargain hunting ahead of US February employment data at the end of the week. US private employers added more than 200,000 jobs in March underscoring expectations that momentum in the labour market will help underpin the economic recovery. A median forecast for employment, or non-farm payrolls, is expected to rise by about 190,000 jobs in March, with private payrolls forecast up by 200,000 when the data is released at 1230 GMT on Friday. Gold rallied to a lifetime high around $1,447 last week because of a falling dollar, violence in the Middle East and North Africa as well as renewed concerns about sovereign debt crisis in Europe.

Euro

The euro hit a 10-month high against the yen and rose against the dollar on Wednesday as markets braced for higher euro zone interest rates, while the Australian dollar hit levels last seen in the early 1980s. The euro erased losses against the US currency after a European Central Bank policymaker said the ECB intends to raise rates gradually, which traders said suggests next week's expected hike may be the first of several. The prospect of higher euro zone borrowing costs bolstered hopes the world economy was improving and encouraged investors to take on more risk, a trend that looks set to carry the euro higher in coming weeks and continue to hurt the yen. The euro's move above its 200-hour moving average around $1.4125 suggests a renewed uptrend, and a break of $1.4250 would make a rally to $1.44-45 likely.

US dollar

The dollar rose to around 83.19 yen a level last seen on March 11, when the yen initially fell after Japan's earthquake. It last traded at 82.89 yen, up 0.5 percent. The dollar hit a record near 76 yen this month when an earthquake in Japan fed speculation the diaster would force Japanese investors to bring money home from abroad. Japanese intervention stopped runaway yen gains and rising US Treasury yields have since carried the dollar higher. Remarks from some Federal Reserve officials about the need to tighten US monetary policy may have contributed to the rise. Yield differentials are key to the revival of the "carry trade," in which investors borrow in low-yielding, low-risk currencies such as the yen to fund more lucrative trades.

Indian rupee

The Indian rupee was stronger for the third consecutive day on Thursday, supported by positive local shares and dollar inflows, but traders said demand for the greenback from oil importers is likely to even out any major gains. Dollar inflows from overseas corporate borrowings usually rise towards the end of financial year as companies close their accounts. Foreign funds have bought Indian shares worth $1.32 billion this month as of March 29, but have sold shares worth $890.5 million so far in 2011. Month-end oil payments, however, are likely to put a lid on the rupee's gains. Oil refiners who make their import payments towards month-end are the biggest buyers of dollars in the forex market. India imports more than two-thirds of the oil it consumes. Brent crude rose 0.4 percent towards $116 on Thursday, heading for the biggest quarterly gain in almost two years.

Oil

US oil prices steadied above $104 a barrel on Thursday as higher-than-expected US crude stocks helped balance support from unrest in Libya and the Middle East. President Barack Obama proposed to cut US oil imports by a third over 10 years, a goal that eluded his predecessors and seen as extremely ambitious by analysts sceptical it can succeed. As Libyan rebels fled in headlong retreat from the superior arms and tactics of Muammar Gaddafi's troops, US officials said President Obama had signed a secret order authorising covert support for the rebels. Top world oil exporter Saudi Arabia and other Gulf countries have boosted output in March, helping to make up for supply lost due to violence in Libya. US crude inventories rose 2.95 million barrels last week and Cushing oil stocks climbed to a record, but gasoline stocks fell sharply, the Energy Information Administration said.