The dollar was still unable to secure any significant momentum for a correction stronger and, although the Euro drifted weaker in early Europe on Tuesday with a move to 1.2035, it subsequently pushed back to 1.2100.
There were no new major trading incentives during Monday while the market attempted to latch on to secondary information. The Monday comments from regional presidents Guynn and Hoenig offered little fresh insight on interest rates except for the fact that decision making will become more difficult as the tightening cycle comes to an end and that this will contribute to greater market uncertainty over interest rate trends. Markets will remain alert to interest rate comments from Federal Reserve officials, especially with no major economic data over the next 48 hours. Consumer credit fell for the second successive month in December as car loans remained weak and this will tend to unsettle the dollar slightly. The net interest rate trends are likely to remain slightly negative for the US currency in the short term.
ECB council member Wellink stated that stronger Euro-zone growth would increase the chances of further interest rate increases and this will maintain speculation over an increase in ECB interest rates during February or March. Euro confidence will remain stronger and the German ZEW index rose to 71.0 in January from 61.6 in December.
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