Fri 10th Dec: Dollar holds on to gains as markets focus on FOMC and data release

The Dollar recovered some more ground yesterday against the majors as traders were keen to look at the important data releases scheduled for release on Friday.
The Fed meeting on the 14 December where it is expected to further raise its benchmark rates by 25 bps taking Fedfunds rate to 2.25 percent is also eagerly anticipated.
Another important event of the day would be the OPEC's meeting where it is expected that the cartel would raise its oil price towards the $28 barrel even as oil prices settle down to $42 per barrel releasing pressure on the US consumer and economy.
Also of keen interest would be the PPI numbers which is expected to show a benign rise in inflation while the budget deficit figure could show further deterioration.
The usual rhetoric from the eurozone and Japan continues to weigh on the currencies as Yen was floating at mid 104 levels during the early Japanese session as Japan's PM denounced the domestic currency's sharp movement against the greenback.
The Bank of England kept its end of the bargain by not increasing the interest rates but a rise in the country's trade deficit to 5.3 billion pounds lead to a further fall in the Sterling.

Thu 9th Dec: Dollar stages a small rebound

Dollar bulls found reason to rejoice as the currency headed for a bounce back against the major currencies.
The dollar gained 2.5 cents against the euro pushing the euro to a low of 1.3191.
The Q3 GDP figures from Japan showed a nominal rise of 0.1%, pushing the currency towards the 105 levels.
The cable plagued by inherent weakness fell to a low below the 1.92 mark as the dollar staged a smart rally against the majors.
Oil prices traded below $42 per barrel provided further reason for the dollar strengthening.
However the dollar party was short lived as the traders piled on dollar shorts, pushing the majors close to their previous crosses.
With a correction long overdue in the major crosses, this could pave the way for a further acceleration in the euro towards the critical 1.35 levels.

Wed 8th Dec: Dollar finds support from poor data and continued jawboning

The Euro managed to hit another all time high despite continuous rhetoric intervention from the ECB officials.
The dollar consolidated after initially dipping to 1.3468 against the euro and cable touching the 1.95 mark. A mixed bag of data releases from the Germany and further jawboning saw the single currency give up some of its gains against the dollar.
Germany’s December Economic sentiments rose to 14.4 beating market expectations however the current conditions index deteriorated to –64.2 as against previous months figure of –57.8.
Whislt the Central Banks in Australia and Canada left their rates unchanged after revising the growth figures, the markets expects a retreat in the respective currencies.
Yen inched towards the 103 levels as markets await the Q3 GDP figures from Japan, which are likely to show a dip.
Markets are expected to watch out for any further intervention and closely monitor the data expected from Japan and the Eurozone apart from the all important PPI and sentiment figures from the US.

Tue 7th Dec: Currencies talked down by central banks, Oil prices shoot up yet again

Dollar gained some lost forts yesterday as jawboning from European finance ministers and central banker formed the theme of the day.
In a meeting ECB chief Trichet was quoted as saying that euro was not strong but dollar was weak, which stalled the currency from gaining any further.
Members also pointed out that with the falling oil prices and rise in euro, the inflationary pressures seemed to be under control and hence it did not seem likely that a rate hike was needed in the eurozone.
The geopolitical risk once again succeeded in pushing the oil prices above $43 as an attack on the US consulate in Jeddah in Saudi Arabia raised the fear levels.
A further OPEC's meeting on Friday is expected to raise its average price per barrel.
Sterling held on to its ground with a fall in the October manufacturing production numbers.
Japanese currency gained almost a yen as intervention rumors from Bank of Japan resurfaced.
Today's data release include Germany's ZEW sentiment index which is expected to fall below the previous month's figures.

Mon 6th Dec: US payrolls once again jolts the market

Traders sold Dollars across the board as US Payrolls rose by a disappointing number of 112,000 (expected 200,000), spoiling the expectations of the Dollar’s bounce.
Although, the dollar fell against the majors, its fall against the Pound was sharper.
With the euro starting the week at an all-time high against the greenback, and the yen at a near five-year high, speculators grew wary of central bank intervention to support the dollar.
These fears were crystallized on reports that Japan and the Euro-Zone had already discussed the prospect of joint intervention.
But with the UK seen to be reluctant to intervene, speculators had a green light to sell the dollar against the pound, helping the Pound move to a 12-year high of 1.9470.
However, the disappointing data released would have little impact on the prospect of interest rate rise in the US later this week.
While the ZEW survey from Germany would undoubtedly show a further deterioration in the economic sentiment and thereby helping the Euro take a dip; the rising speculation of a possible intervention by the ECB would keep the Euro bulls from buying at any further levels.
However, the medium to short term view for non-dollar currencies continue to remain bullish. The Stock investors ignored the Payrolls news and concentrated on the economy expansion data released in the previous week.
The Dow closed the week higher at 10,592; while the Nasdaq was also seen trading higher at 2148.