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Wednesday, March 15, 2006

FX Closing Comments

The Dollar remained under pressure today, as the Treasury's capital inflow report was unveiled. For January, capital flows in the U.S. totalled $66b, which was slightly better than December's $56.6, but still not enough to match the trade deficit for January, which was $68.5b. This marks the 2nd straight month were inflows did not match the trade deficit. This is widely felt to be Dollar negative news. Concerns that U.S. equity markets may be peaking may have contributed to the recent dip in inflows.

Tomorrow may see some volatility in the Pound, as their crucial retail sales report is due early in the day. The U.S. data includes housing starts, building permits, and CPI. Building permits may be soft after January's large gain, which was credited to the unseasonable warm weather. Written by Mark Smyth