Wednesday, January 04, 2006

Bloomberg has the latest on the US dollar. "The dollar had the biggest two-day drop against the euro in more than four months after the Federal Reserve suggested it is closer to halting its interest rate increases. An end to the Fed's rate increases may prevent a further widening of the yield advantage on U.S. assets that pushed the dollar up more than 14 percent against the euro and yen in 2005."

"'There's a dollar-bearishness out there right now,' said Peter Lorraine, a managing director of foreign-exchange trading at Brown Brothers Harriman & Co. in New York. 'Once the Fed says they're getting near the end, the dollar is falling.'"

"The number of rate increases needed to control inflation 'probably would not be large,' yesterday's minutes from the Fed's December policy meeting showed."

"'There are players, including hedge funds and pension funds, establishing new longs in the euro at the start of the year,' said Lee Ferridge, a proprietary trader at Rabobank Groep in London."

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