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USD under pressure again

USD under pressure again

The USD was hurt overnight on new speculation that the Federal Reserve are going to extend the quantitative easing program pushing GBP/USD above 1.55 and EUR/USD above 1.30 although they have both fallen back slightly. US retail sales figures for August gave the USD a brief boost yesterday coming in better than expected which will ease fears of a double dip recession. This goes along with what Warren Buffett said yesterday, he firmly thinks that the US will avoid a double dip recession.
 
Yesterday saw the UK inflation data released and it is still up there above the 3% mark coming in at 3.1%. A jump in clothing and footwear prices along with a rise in food and airline tickets were the main contributors to the high figures. Mervyn King is making a speech this morning which could give a clue on his thought over the stubborn inflation as the BoE expected this figure to have dropped back long before now.
 
Japan stepped into the currency markets yesterday for the first time in 6 years in a bid to curb the recent gains in the Japanese Yen. Following the action JPY fell 2% against the USD after hitting to yet another 15 year high, the move was well received in Asia with stocks rallying on the move.
 
The Euro has been doing well this week as focus moves from the sovereign debt issues and even though the German ZEW survey of economic sentiment came in much worse than expected at a negative figure.
 
Today we have quite a bit of data out again with Euro inflation, UK employment data and a slew of data for the US this afternoon. This afternoon could offer some support for the USD but if any of the data comes in worse than expected it will renew fears of a double dip recession or at least of another bout of QE. The Euro looks reasonably well placed for the day and short of any shock news it should hold its ground today and possibly get comfortably above the 1.30 mark against the USD.

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