Key US data set to provide greenback with solid direction.
January 3rd - Debate over the likely future direction of US interest rates has given dollar traders something to work on as the New Year gets underway. The release of data later in today’s session – including US construction spending and perhaps more significantly the FOMC meeting minutes from December – may provide further direction here, but right now there’s a lack of clear consensus as to for how much longer we can expect the Fed to keep hiking interest rates. Many had been speculating that Alan Greenspan’s departure would precipitate a change, although data released of late has underlined the fact that inflationary pressures remain and so long as the trade deficit stays in check then there’s little to prevent further tightening of monetary policy through the early part of 2006. In recent hours sentiment does appear to have shifted, with those traders active in the market taking a more bearish stance over dollar positions, although volumes remain depressed with many counting today as the first trading day of the New Year. However, directional data is scheduled for release later in the session and this should allow some real momentum to be established in the near term, in turn reflecting some fair values for the greenback after what has been a relatively choppy couple of weeks.
Wayne Roworth and Enis Mehmet
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