Monday March 6, 2006 - 11:04:20 GMT
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INVESTICA Ltd - www.investica.co.uk
Short-term dollar protection
The Euro pushed to a high of 1.2050 against the dollar on Friday before weakening after the US ISM data. The Euro recovered from a brief drop below the 1.20 level and settled close to 1.2035 later in New York. This steady performance on Friday was in contrast to the weakness seen at the end of trading weeks over the past month. The Euro reinforced its improved position with gains to 1.2090 in Asia on Monday before settling around 1.2050.
The US data was mixed, but with a firm bias and helped underpin dollar sentiment. The University of Michigan consumer confidence index was revised down to a final 86.7 in February from 91.2 the previous month, but the ISM index for the services sector rose to 60.1 in February from 56.8 the previous month. The prices index weakened slightly, but there was a sizeable increase in the employment component and this is likely to boost market confidence in the payroll report which will be released at the end of this week. The ISM data will support US interest rate expectations and will help buttress near-term dollar sentiment despite the longer-term dollar risks.
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