Monday December 19, 2005 - 10:48:08 GMT
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INVESTICA Ltd - www.investica.co.uk
Dollar looks for support
The dollar weakened to a low of 115.50 against the dollar in early Asia on Monday, but there was then evidence of bargain hunting for the US currency and the dollar rallied back to 116.50 in early Europe as trading conditions remained choppy.
There were no major warning comments from Finance Ministry officials on Monday, but there are likely to be significant comments if the yen strengthens through the 115.0 level against the US currency. The government left its economic assessment unchanged in its latest report with officials expecting firm growth and an end to deflation. There will still be some pressure on the Bank of Japan to delay a monetary tightening, but expectations of a tightening early in 2006 will limit yen selling pressure.
The latest official IMM data recorded a further small increase in short yen positions and a total short position of around 72,000 contracts. Many of the short positions will, however, now have been covered and the data has little short-term value.
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