Dollar poised for further gains off upbeat economic data; overseas outlook generally soft
November 28th - Flash retail sales figures from the US showing a significant spike in spending over the holiday weekend look set to provide further support for the greenback as we run towards the month end. Recent speculation that the FOMC would start to ease away from such a hawkish stance over monetary policy may now be open to some scrutiny as there would seem to be a definite feel good factor amongst consumers right now, with inflationary pressures remaining a significant risk in the months ahead. Although there’s little sitting on the economic calendar for Monday, tomorrow sees the release of US durable goods orders and various consumer confidence metrics, so this ought to provide additional direction in the near term. With the dollar sitting close to some key psychological levels – 120 against the Yen and 1.70 against the Pound – a break through these points is now well within reach. UK consumer credit figures tomorrow may be in a position to provide some additional direction for Sterling although unless rampant growth is seen here there’s little reason to believe that the MPC will be looking at a rate hike any time soon. Similarly, Japanese unemployment data is due for release later today. Again, there’s been some speculation as to when the BoJ can start to hike interest rates – April 2006 has been looking like an ambitious target and unless there are any surprises in the jobless data, downside pressures on the Yen may well strengthen in the near term too…
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