Interest rate policy dominates as dollar falters, Euro rallies
March 13th - After last week’s buoyant US economic news, traders are starting to switch out of long dollar positions in anticipation of the fact that numbers due for release over the coming days – including retail sales, TICS data, the consumer price index and Michigan sentiment – may start to underline some weaknesses in the American economy. Suspicion is that this could signal an end to the Fed’s run of interest rate hikes and as a result the greenback has found itself under a degree of pressure in Asian trade. Most notably this has been against the common currency, where speculation is building that further rate hikes from the ECB may be imminent. Again, there’s a number of key economic indicators for the common currency due to be released in the coming days including the ZEW survey tomorrow – any suggestion of future inflationary pressures will support calls for a tightening of monetary policy in Frankfurt, in turn lending further support to the Euro. Interest rates are once again very much back in focus and stand to provide further direction for the major currency pairs in the days ahead…
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