Dollar little changed after rebounded from earlier losses

Forex outlook:

The yen fell to lowest in more than a month against the dollar and touched a record low versus the euro as speculation that the Bank of Japan will unlikely boost interest rates next quarter. The Japanese currency fell to $118.48 per dollar from 118.12. It earlier touched 118.50, the weakest since 9 Nov. The yen touched an all-time low of 156.40 per euro today and traded at 156.08 from 155.86.
The dollar reversed initial losses against the majors amid light trading volume on Wednesday as investors prepared for a possible rebound today when U.S. economic data is released. Signs of slower U.S. growth have investors betting the Federal Reserve’s next move on interest rates will be a cut, though consensus on the timing of that move is harder to come by.
The euro gained earlier on Wednesday after ECB President Trichet said policy makers need to take “firm” action to keep prices stable because growth in the 12 nations sharing the single currency may push up wages more than expected. The euro was unable to break above the $1.3250 area, and that sparked selling that took it in later trading back down to a session low of around $1.3160.

Some liquidity will likely return to the market today when the final estimate of growth in third quarter U.S. gross domestic product will be released. Investors will look for any clues on the economic growth in the U.K. from the third quarter gross domestic product data, which is expected to show the U.K economy grew by 2.7 percent year-on-year, quarter-on-quarter growth is expected to be unchanged at 0.7 percent.

Gold: Gold fell on Wednesday, erasing an earlier gain, on speculation the value of the dollar will hold steady against the euro, and investors expected to stick to tight ranges ahead of the year-end holidays. Gold may not rebound until 2007 when investors and funds resume buying after from the holidays, analysts said. Gold is headed for a sixth straight annual gain. The metal moved in tandem with the euro from 2002 to 2004. Last year, gold gained 18 percent even as the dollar climbed 14 percent against the euro.

Crude Oil: Crude oil climbed to a three-month high after a government report showed that U.S. inventories dropped more than expected and imports fell, signaling that OPEC is acting on its pledge to trim output. Crude oil stockpiles fell 6.3 million barrels last week after shipping disruption on the Gulf Coast due to heavy fog. Crude oil price touched $64 a barrel after the data was released, recovered later, trading around $63.65/70 as crude stocks were still nearly 2 percent higher than they were a year ago. Investors probably will see a big gain in imports in next week's report as the stocks were discounted because of the problems with shipment delays.

  
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