Retracement or renewed dollar weakness ?
The dollar felt extremely vulnerable to further weakness as the New York market closed today. Traders seemed to be holding on till 5.00p.m.in hopes that when they walk into the office tomorrow things would be “better”. Clearly this is what I was doing. Everyone I talked to today pointed to tomorrow’s CPI number as a “big event”. I think the traders are trying to talk themselves into this one. I see further dollar weakness in the days ahead as dollar bulls get continually squeezed out of their positions. I will also be looking for Latin American currencies pairs (particularly Usd/Mxn. and Usd/Brl) to head higher for the balance of the week. Those currency pairs have both moved a lot in recent weeks and some profit taking going into month end would not be surprising
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