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Wednesday, May 10, 2006

FX Closing Comments

The Fed meeting was a bit anti-climatic with the fed funds rate rising another 1/4 point to 5%. The commentary had a few alterations, specifically the phrase "some further firming may yet be needed." The implication seems to be that the Fed acknowledges that the end may be soon. The statement also implies a high degree of "data dependence." The market reaction was subdued with the Dollar slipping a bit more, and equities and bonds remaining largely unchanged. At the Treasury dept., their semi-annual report does not brand China a currency manipulator. The next hurdle for the Dollar is the March trade deficit figure on Friday.