Dollar weakness shrugged off as traders look for further rate hikes
February 16th - The dollar came under pressure yesterday as a result of a worse than expected figures with the US Tic inflow 56.6bln followed by the negative response from traders as they began to interpret Ben Bernanke’s testimony on the economy yesterday. The losses however, proved largely short lived as the prospect of further rate hikes at the Fed came to the fore and the greenback bounced back as a result. The dollar has since resumed the sideways churning that we’ve seen in recent days, although with key numbers still to be released ahead of the weekend break further volatility may well be seen in the near term. Falling oil prices may well start to buoy consumer confidence and although this may not be reflected in today’s Michigan readings, inflationary pressures hardly seem likely to slip that far from focus in the near term. With this in mind, US housing data will also come under scrutiny later in the session. Critically, another short term rally for the dollar looks set to come down to whether or not we can expect to see more than two further rate hikes from the Fed in due course and with the emphasis now being on adjusting monetary policy on the back of economic data, expect numbers in the coming weeks to be under even more scrutiny than normal…
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