June 26th – The dollar has held onto most of the gains from the latter part of last week as the European trading session gets underway. Speculation as to the possibility of the FOMC hiking rates by 50 contractual base points this time around doesnt seem to have been dismissed yet as the Fed tries to get a grip on inflationary pressures, although ahead of Thursday verdict expect relevant economic readings such as tomorrow US consumer confidence and existing home sales, to be closely scrutinised. Obviously any concrete suggestion that the US economy is slowing may be sufficient to initiate a run of profit taking, the greenback has rallied around 2% against the major currencies in less than a week, but otherwise it may be a case of grinding on towards the next key technical levels.
In Japan, uncertainty continues to haunt the central bank ahead of tomorrow’s submission of personal financial details to Parliament by Governor Fukui.
Some personal investments typically created back in 1999 may result in the departure of the BoJ Governor and with his acknowledged hawkish stance any change in leadership would be more than likely put back the possibility of a Japanese rate hike by some time, in turn leading USD/JPY back towards that key 120 level.
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