International | May 19 2006
By Robert Rudnicki
On one hand we have the US Fed’s Jeffrey Lacker stating that unfavourable inflationary figures make a June interest rate rise pause less likely, and on the other Fed Chairman Ben Bernanke saying he is worried about the US housing market, that it is clearly cooling.
Coupled with some weak Philadelphia Fed data, signals to the market have been mixed.
As a result, analysts at Danske Bank say FX markets could be in for a day of range trading today, given the lack of any major announcements. Currency strategists at ANZ Bank too believe the markets could be in for some "consolidation" following recent turbulent moves.
One exception is for the yen.
Band of Japan Governor Fukui is due to give a press conference at 16.30 Sydney time any "dovish comments could send the yen lower, Dankse Bank analysts say.
Some interesting comments were made by currency specialists at DBS this morning. According to the team, investors should not take lightly the rumours that John Snow might be replaced as the US Treasury Secretary.
If the rumours prove to be true, DBS believes Snow’s replacement may signal a change in the government’s US dollar policy in that the new policy would not only encourage less imports, but also allowing for import substitution to recover lost jobs.
In short, DBS explains, “Capitol Hill may be thinking about a broader [US] dollar adjustment beyond China”.
