Dollar holds ground, Aussie hurt by IMF gold sales

By Anirban Nag

SYDNEY (BestGrowthStock) – The U.S. dollar was firm on a basket of currencies, in sight of recent 7-month highs, while commodity-linked currencies slipped after the International Monetary Fund said it planned to sell more gold in the market.

The IMF announced it would begin phased open-market sales of the remaining 191.3 tons of gold under a program launched last year to raise new resources for lending.

The Aussie fell to $0.8964 from $0.8995 late in New York on Wednesday while the kiwi dropped to $0.7008 from $0.7033 after the announcement.

“The gold sale news is weighing on the Aussie especially against the U.S. dollar which is seeing a biddish tone,” said Jonathan Cavenagh, currency strategist at Westpac.

“We have a month-end target for 82 for the dollar index (Read more about the global trade. ) and given the sovereign risks surrounding the euro and the macro economic pulse getting better for the U.S., we would see every dip in the dollar as a buying opportunity.”

The dollar index (Read more about the global trade. ) (.DXY: ) was firm at 80.46, not far from its recent high of 80.748. A weekly close above 80.43 will establish an uptrend for the dollar in the near term. Charts show the next target is at around 81.47, which is the index’s 2009 high, and then around 81.90, which is the 50 percent retracement of index’s fall from 89.62 to 74.17 last year.

The dollar got a boost from the minutes of the last Federal Reserve policy meeting and stronger-than-expected data. U.S. housing starts hit their highest in six months and industrial output showed a solid rise.

The minutes of the Federal Reserve’s January meeting showed members saw a need to begin unwinding some of the extraordinary stimulus measures in place, including a program of asset sales in the near future as an economic recovery gathers ground.

The upbeat data helped the dollar retain broad gains against the yen. It pared some of those gains in Asia, easing to 91.10 yen from 91.32 yen late on Wednesday when it rose to as high as 91.38 yen, its highest since January 21.

Eyes are now on the Bank of Japan’s (BOJ) rate announcement and subsequent press conference later in the day. The BOJ is likely to keep rates at 0.1 percent and hold off any new initiatives.

The euro was on the defensive, at $1.3600, having lost nearly 1.2 percent on Wednesday. It fell in the previous session after European finance ministers on Tuesday gave Greece a one-month reprieve, until March 16, to show its deficit reduction plan was being rolled out effectively.

They set the same deadline for themselves to decide what should happen next.

The euro has fallen almost 5 percent against the dollar since the start of the year on concerns about the fiscal health of Greece and other euro zone countries.

Currency speculators raised net euro short positions to a record high last week and the single’s currency bounce earlier this year was more to do with positioning adjustments than structural improvements on the currency union’s outlook, traders said.

Sterling was also subdued at $1.5674, having shed 0.75 percent on Wednesday after minutes from the Bank of England’s latest policy meet showed a dovish bias and UK unemployment data was soft.

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(Editing by Balazs Koranyi )

Dollar holds ground, Aussie hurt by IMF gold sales