Monday, March 13, 2006


US Dollar To Turn On Key Economic Data

A pair of reports on the start of the week in currencies. "Major currencies remained stuck in narrow ranges against each other, reflecting a quiet start to the week and ahead of some key US data in the days to come. After a sharp rise on Friday in the wake of forecast beating non-farm payrolls, the dollar had edged lower. However, its falls have been limited due to expectations that US interest rates will have to go up further."

"'Friday's solid US payrolls headlines and strength in average earnings growth have boosted Fed tightening expectations further,' said Daniel Katzive. 'Moreover, with a fair amount of Fed tightening now priced in, the US currency remains more vulnerable to downside surprises than upside surprises,' said Katzive."

"Among the key US data scheduled for this week are the US retail sales numbers for February on Tuesday and US inflation numbers for February on Thursday. Additionally, the US Treasury report on portfolio flows into the country are scheduled for Wednesday. This will show if the US will be able to cover its foreign funding needs through long-term portfolio flows. 'We are sceptical and see the dollar coming under pressure,' BNP Paribas analysts said."

"'After last week's buoyant U.S. economic news, traders are starting to switch out of long dollar positions in anticipation of the fact that numbers due for release over the coming days, including retail sales, TICS data, the consumer price index and Michigan sentiment, may start to underline some weaknesses in the American economy,' said Stuart Scrase, senior dealer at CMC Markets, in a note."

"In New York trading, the dollar was last quoted at 119.04 yen, up 0.03%, while the euro edged up 0.2% to $1.1934. The British pound was last up 0.3% at $1.7306. The dollar changed hands at 1.3135 Swiss francs, down 0.3%."

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