16 February 2007, 16:07  The dollar was steady ahead of a set of US economic data

The dollar was steady ahead of a set of US economic data due this afternoon which analysts said is likely to weigh on the American currency. The PPI is expected to show wholesale inflation falling a monthly 0.5 pct in January, with the annual rate of core wholesale inflation easing to 1.8 pct from 2.0 pct. Housing starts are seen falling to a seasonally adjusted annual pace of 1.6 mln units in January while consumer sentiment, as measured by the University of Michigan, is seen rising slightly to 97 in early February from 96.9 in late January. "The dollar is expected to remain under pressure given the recent stream of negative data surprises coming from the US," said BNP Paribas FX strategists in a note, adding that the housing data and the consumer confidence indicator "also have the potential to deliver further negative news for the dollar." The dollar suffered in the past few days on somewhat dovish remarks by the Federal Reserve Chairman Ben Bernanke. Also data for net inflows of capital into the US suggested the dollar may come under further pressure as US investors' purchases of foreign assets has reached record levels. Dollar may likewise lose some ground against the Japanese yen ahead next week's interest rate decision there. The likelihood of a rate hike increased after the release of strong GDP data, and some investors may find it the right moment to scale back carry trades, an analyst said. Elsewhere, the pound failed to pare this week's losses, as the poor retail sales data from yesterday continued to weigh.

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