Michael Woolfolk Market Quotations

This was a report that was made to order for dollar bulls. The market was predisposed to buy dollars and the report added gasoline to the fire.

But the tape will not be as important to the market as new data.

Given the recent spate of positive January data, CPI and durable goods are unlikely to disappoint. The USD is positioned to make new gains ... as favorable U.S. growth and interest rate differentials weigh on market sentiment.

Market players don't want to be caught the wrong way here going into a very heavy data week in the U.S..

Whereas Asian demand for US bonds is unlikely to end any time soon as a conscious policy decision, the reversal of petrodollars from the US bond market remains the greatest threat to the dollar in 2006.

While the US trade deficit showed an unexpected improvement in February, any lasting market enthusiasm was firmly misplaced. Energy prices continue to rise while China remains resistant to further currency flexibility.

What we are concerned about is that going forward they may decide to remove petrodollars and redirect them elsewhere. If they do, it is negative for the bond market and ultimately for the U.S. dollar.

Anecdotal evidence on the trading floor indicates things have been lighter than at any other point in the week. You are seeing some one-off flows that are making a greater impact in the market due to this lower level of liquidity and volume.

February's data support the view that the U.S. labor market remains strong, particularly on the services side, with unemployment solidly below the 5% level. The Fed is likely to continue raising rates for the foreseeable future.

(The survey) was a big surprise this morning, but some of the market is saying that Detroit, because of loss of auto jobs, does not reflect the rest of the nation.

The weekend 'No' vote was deemed to be negative for the euro and has sent the euro/dollar into a new trading range. It is quite possible that in the coming weeks we could get as low as $1.20 before the market decides that it has bought enough dollars for the time being.

The US dollar's ability to rally strongly off a better-than-expected trade deficit is a strong indication that the market hasn't yet given up on the dollar.

The U.S. dollar's ability to rally strongly off a better-than-expected trade deficit is a strong indication that the market hasn't yet given up on the dollar.

The dollar rally after the non-farm payrolls report underscores the continued importance of labor market tightness with respect to interest rate expectations.

The market took this to mean that there is a 100 percent chance that interest rates will be increased at the next meeting and a 75 percent chance at the meeting after that.

The market is happy with the number as it shows strength in Canada's economic growth. Investors are willing to buy the Canadian dollar.