Monday June 14, 2004 - 10:07:16 GMT
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INVESTICA Ltd - www.investica.co.uk
Greenspan comments will be crucial
The dollar remained strong in early Europe on Monday with a push to a high of 1.1955.
Comments from Fed officials have continued to dominate the markets and they will remain an important focus this week, especially with Greenspan testifying on Tuesday. There have been further comments from officials over the need for responsibility over inflation. The Fed is aiming to convince markets that it has the situation under control as it will want to avoid a rise in inflation expectations. The Fed will still want a measured approach to an increase in interest rates, but the risks of a more aggressive tightening have increased slightly and speculation over such a move will underpin near-term dollar sentiment.
Greenspan's comments will be crucial to see whether he wants to take a more balanced view. The chances of a 0.5% hike at the end of June are now around 25%. The US inflation figures tomorrow will also be important and a core consumer price increase of more than 0.3% would again increase speculation of a more aggressive tightening.
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