The dollar pushed to highs around 1.2065 against the Euro on Wednesday, but was unable to sustain the gains and drifted back to 1.21 in New York before settling close to 1.2080. The dollar retained a slightly firmer tone in early Europe on Thursday, but was unable to make substantial headway and was holding close to 1.2070.
Markets will be on alert for interest rate comments from ECB officials over the next 24 hours and the Euro will be vulnerable if officials voice concern over growth prospects.
Markets will continue to look ahead to the Fed’s interest rate meeting next week. There is still a very high degree of confidence in an interest rate increase to 4.75%, but there are still major uncertainties over policy thereafter and the housing data will be watched closely over the next 48 hours to assess interest rate prospects. Ahead of the data, US bond yields fell during Wednesday and this hindered dollar rally attempts. Market expectations are more likely to be revised down than up given that rates of 5.0% are currently priced in.
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