NEWS / European Community

Dollar remains upbeat amidst disappointing economic news from elsewhere.

July 13th - The dollar may have held onto the majority of yesterday??™s gains after the better than expected trade deficit data again suggested there was one less reason why the Fed couldn??™t look to tighten interest rate policy at the August meeting, but attention will now ??“ at least in the short term - be focusing on the weekly jobless claims to see if the run of support can be sustained. Downbeat economic data out of the UK yesterday has certainly left cable on the back foot whilst some similarly disappointing numbers out of Japan overnight have ensured again that the Yen is working its way lower too. Obviously any decision by the BoJ to hike rates tomorrow stands to result in some upside for JPY but with further US-centric data due ahead of the weekend break ??“ including Michigan sentiment and retail sales readings - it??™s certainly feasible that the dollar could realise some additional gains in due course. It??™s worth bearing in mind however that the recurring temptation to book some profits will likely remain relatively close, not least on the basis that futures markets continue to point towards rates at the Fed coming off in the early part of 2007.

Paul Jackson and Enis Mehmet