Thursday July 21, 2005 - 09:59:51 GMT
Share This Story
INVESTICA Ltd - www.investica.co.uk
Where next for the dollar?
The dollar was little changed ahead of Greenspan's testimony and strengthened after the prepared statement to a high of 1.20 against the Euro. The dollar was unable to push through 1.20 and a modest reduction in long positions quickly snowballed into aggressive stop-loss dollar selling. This pushed the dollar down to a low of 1.2185 before a partial recovery.
Greenspan remained optimistic over the US economy, repeating his expectations over firm growth despite the negative impact of high oil prices. He also continued to suggest that US interest rates would be increased further over the remainder of 2005 and gave no hint that the central bank was close to stopping the series of rate increases.
Greenspan did, however express some concerns and uncertainties surrounding such areas as the housing market. It will be more significant if he chooses to emphasise these potential negatives in the second part of his testimony on Thursday. Treasury yields fell slightly in New York after initial gains, edging away from the 100 basis point threshold over German bunds. Short-term yield considerations will, however, still offer underlying dollar support with markets looking for an increase in interest rates to at least 4.0%. Nevertheless, these expectations are liable to be revised down quickly if there is a series of weak data and any hint of a pause in rates would be liable to weaken the US currency sharply.
The may Euro-zone current account surplus was limited at EUR0.9bn, but the capital account was stronger than expected which will alleviate fears over investment outflows. The evidence continues to suggest that the Euro will secure buying interest below the 1.20 level against the US currency as central banks diversify their reserves away from the US currency.
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."