There has been a shift this week towards expectations of another U.S. interest rate rise in March -- the interest rate differential is there and it is helping the dollar.
More Quotes from Derek Halpenny:
Any shift in policy on Thursday from the BOJ is very likely to be accompanied by a strong commitment to maintaining zero interest rates. There is no trade more obvious than selling the yen against the dollar.Derek Halpenny
The broader picture for the yen's decline is down to the continued deterioration in Japan's trade surplus.
Derek Halpenny
The market has already come to the conclusion that the medium-term impact of Katrina will be negligible if not net positive, therefore weak figures in the near term won't have any bearing. The market is now looking for a Fed move next week.
Derek Halpenny
Following previous moves by the Federal Reserve, the market pretty much immediately looked ahead and had a confident view on the interest-rate outlook for the next two meetings. That's been a supportive factor for the dollar. Now it seems to be different.
Derek Halpenny
His number one objective will be to stress continuity. Continuity means more interest rate increases, so that means the dollar can keep going up.
Derek Halpenny
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