Forex - Dollar steady after rising on Fed officials´ hawkish comments
Tuesday, October 5, 2004 8:54:34 AM
afxpress.com
Dollar steady after rising on Fed officials' hawkish comments LONDON (AFX) - The dollar was steady after rising towards the top of its recent range against the euro after hawkish comments from Federal Reserve officials yesterday
Anthony Santomero, president of the Federal Reserve Bank of Philadelphia, said US monetary policy remains stimulative and that the Fed still has a way to go before it reaches a 'neutral' stance. Fed board governor Ben Bernanke meanwhile suggested that the US economic recovery will not be hindered by higher oil prices
The comments helped alleviate recent concerns that the Federal Reserve may decide to take a break from hiking interest rates
"In general Fed speakers are giving little hint of an imminent pause in the tightening cycle," said HBOS currency analysts Steve Pearson
With several more Fed officials due to speak this week, he said it is likely "a uniform message will be communicated to the market"
US equities have been rising lately, which has also given a boost to the dollar, but solid corporate earnings and economic data will have to continue in order to convince the market that the US economic recovery is well underway, he said
"Firm economic data and firm third quarter earnings numbers are required to sustain both this upward move in equities and any associated transition to a more dollar positive environment," he said
Focus today will centre on this afternoon's US ISM services index for September, which is expected to rebound and could help the dollar post further gains
The employment component of the index will be closely watched in the run up to Friday's key non-farm payrolls figures, analysts said
Elsewhere, there was little reaction to this morning's euro zone data, which showed a drop in the purchasing managers' index for services to 53.3 in September from 54.5 in August, and below forecasts for a reading of around 54.5
Sterling dropped, however, after UK services PMI for September fell to 54.7 from 56.9 in August |
