(11:30 GMT - 14/12/07)
The dollar has been stronger after we had a run of stronger US data. Today attention will turn to the US CPI in which if the CPI inflation figures also turns higher than expected, this will highlight the Feds predicament as it looks to lower rates further to prevent a recession in the US economy.
Elsewhere, the dollar pushed higher against the euro as the market counters stronger than expected US retail sales and PPI data yesterday. Tracking yesterday's US gains, the Euro fell today against the US dollar amid the release of the CPI data for the month of November to fetch a low of 1.4534 after recording a high of 1.4655.
The UK economy was suffering from an economic heart attack as it face a slow down in the housing sector. Luckily the bank obliged last week in the form of an immediate reduction in interest rates. Now we are looking at the aftermath, and the outlook is not looking appealing at all. Because so far surveys showed the housing market slowdown is worsening raising speculation the Bank of England may need to cut rates again after the reduction to 5.5% seen last week. What is making it worse for the sterling to incline against the dollar is the strong measure of consumption data (retail sales) out of the US economy. The pair set a low of 2.0266 after recording a high of 2.0446.
At the start of the morning secession, the yen rose versus a number of majors on doubts that the Fed plan to pump extra funds will not resolve the credit crunch turmoil. However, the market turned 180 degrees and now the dollar is gaining massively against the Yen before the US CPI report pushing the pair to record a high of 113.06 and a low of 112.14.
It looks like the currency trading markets are now experiencing volatility with the critical CPI report coming up in which prices are likely to be translated into a stronger inflation rate. With such a result unless the market is up for a surprise, we could only predict that the feds will react upon the future of the US interest rates.
Dear reader, it will be important to watch for any string surprise a head of us in the data as the dollar is likely to remain volatile amidst the end of the week
(11:30 GMT - 14/12/07)