The early pressure on the USD we detected yesterday is bearing fruition and once again the USD negative play is back to the fore and there is even a return to the carry trade as Wall Street's strong rally brings back confidence to investors/traders. But there has also been a host of rhetoric and reports over the last 24 hours that have weighed on the USD. The UAE is reported to be at a 'crossroads' over the dirham's dollar peg in the light of a falling US currency and is forcing Gulf producers to review exchange rates in favour of a basket of currencies. Overnight Bof J's Mizuno has warned of the shrinking of foreign fund inflows (tic data) to finance the US current account and President Bush has surmised that 'the strong US economy will lead to a stronger US dollar'. All good news for USD bears. Some important US economic releases today but our USD negative bias is alive and well!
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