Friday June 11, 2004 - 09:40:09 GMT
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INVESTICA Ltd - www.investica.co.uk
Rate expectations boost dollar again
The dollar will gain support from another round of hawkish comments from Fed officials, although the dollar will find it difficult to gain further ground on rate expectations alone. There will also be some unease over the trade and inflation data releases due next week and this should curb speculative buying. Although the dollar will make a fresh rally attempt and could push to 1.1960, sustained gains beyond 1.20 will be tough.
The dollar weakened back to 1.2105 in late New York, but strengthened again in Asia, pushing to 1.20 in early Europe on Friday with a temporary move to 1.1970.
During Thursday, the US currency was vulnerable after the strong gains seen over the previous 24 hours and there was also a desire to take profits ahead of the long weekend. Interest rate comments have, however, remained the dominant influence and remarks from St Louis Fed Governor Poole warned that interest rates might need to rise faster than expected to keep inflation under control. Rate expectations triggered fresh dollar support, but it will be difficult to secure further aggressive buying.
The US data did not offer any greater support for the dollar. US jobless clams rose to 352,000 in the latest week from 340,000 the previous week, although the number of continuing claims fell to the lowest level since May 2001. The data next week will be under close scrutiny, especially with the trade and producer price inflation figures now delayed until next week.
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