FX Closing Comments

After holding its own over the past 3 sessions, the Dollar took a nice leap this morning, as the result of a number of financial and non-financial events. Dollar sentiment was jolted during the European session when news of the death of wanted terrorist Abu Musab Al-Zarqawi hit the wires. Later in day the ECB confirmed that was raising rates by the expected 25 basis points. While an upwards move in rates would be supportive for the Euro, the market had priced in a rate hike many weeks earlier. There had also been an outside concern they might move 50 pts. When they didn't raise 50 pts, there was no reason to stop the upward "euphoria" move in the Dollar, resulting from Zarqawi's demise. One additional bit of good news, which was also Dollar supportive, was the weekly jobless numbers that fell a surprising 35,000 in the prior week. As such, it looks like an increasingly safe bet that the Fed will be raising another quarter percent at the end of the month. Aside from today's theatrics, it is this perception of continued rate support that is currently supporting the Dollar. The June Dollar Index opened at 84.89, reached a high of 85.98 and closed the session at 85.89, an even 100 points higher.