NEWS / European Community

Dollar rallies on anticipation of data

July 24th - The dollar undoubtedly came under some concerted pressure late last week but early in Asian trade a reversion was initiated, largely on the basis of traders covering off short greenback positions ahead of further US economic data in the week ahead. There are a number of key indicators due for release in the coming days and these potentially could end up dictating where the Fed??™s monetary policy will go next ??“ there??™s still a bias towards seeing another hike at next month??™s meeting but after that it remains very much open to debate. Any bullish reading in either the consumer confidence number (Tuesday) or the homes data (Tuesday and Wednesday) stands to further buoy the dollar as this news would ultimately suggest inflationary pressures are continuing to weigh on the US economy despite the ongoing run of rate hikes. In the shorter term however there??™s little of note on the economic calendar today. It seems as if it??™s going to be a case of traders posturing and attempting to second guess the week??™s forthcoming data ??“ this may produce further volatility but the real test will come with tomorrow??™s numbers when some more significant direction may be forthcoming.

David Hutchings and Enis Mehmet