Wednesday, November 08, 2006

Dollar Drifts Amid Central Bank Talk

At 12:00 AM Japan September Leading Index (exp 20.0, prev 18.2) At 2:00 AM Germany September Current Account Balance (exp E6.5 bln euros, prev E2.4 bln euros)

The dollar was softer in early Wednesday trading as the results of the US mid-term elections remain unclear. Currencies have been driven by central bank expectations, with yesterday’s comments from FOMC officials tempering market anticipation for policy easing. Moreover, the yen benefited from hawkish rhetoric by BoJ Governor Fukui, who stressed the importance of pre-empting risks with policy action rather than waiting for inflation to build up – which would result in unwanted swings in the economy.

The G7 economic calendar for the coming session remains light, with only the release of Japan’s September leading index and Germany’s current account balance. The key highlights are due out on Thursday, which includes the BoE rate decision.


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