FYI | Jun 30 2006
By Rudi Filapek-Vandyck
No prizes for guessing the short term direction for the US dollar now that the Fed has eased interest rate expectations, for now at least.
ANZ Bank senior currency strategist Tony Moriss suggests it is almost a sure-fire bet the greenback will come under pressure now. Central bankers across the globe are still in tightening mode and Moriss points out the BOC, BOJ, RBNZ, RBA, ECB and BOE are all due to meet before the next FOMC meeting.
On the other hand, Moriss says, there can be no doubt that the softer tone to the latest FOMC statement is a positive for global growth prospects. Moriss thinks it will shore up risk appetite and thus the performance of peripheral markets in the short term.
From a technical point of view, the outlook for the USD has turned more negative, Moriss says. He suggest the US dollar is bound to test the near-term targets against the Yen at 114.60 while a break of the 1.2680 against the euro would open the way to a move to 1.2790.
As far as the Aussie dollar is concerned, Moriss points out the AUD has now broken the hourly downtrend around 0.7370 with the 100-day average at 0.7420 likely to be good resistance. Further weakness for the USD could see a correction towards the 0.7500-50, he believes.