Dollar in favour as traders eye higher rates; profit taking buoys Yen in short term
February 7th - With little data having been released overnight, the dollar is continuing to consolidate its existing position with traders anticipating further rate hikes from the Fed in the months ahead. Unless we see a sudden turn in the numbers, expectations are that US rates will soon hit 5%, keeping inflation in check and of course also ensuring that the trade deficit remains adequately covered. Consumer credit figures due towards the end of today’s session will be closely watched, again for indications of these inflationary pressures - analysts are forecasting a notable rise in this number as consumers continue to take advantage of comparatively low inflation and inexpensive borrowing, something that will further calls for higher rates. In Tokyo, appreciation in Japanese foreign currency reserves has provided further confidence in the Yen but the biggest swing in Asian trade - precipitating a quick move from the 118.90 region down towards 118.25 – has been a result of profit taking off the run of gains posted by the greenback over the last week. There’s not too much additional data due for release through the session, but as to quite where USD/JPY finds its next level remains to be seen…
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