Olson's comments reaffirmed our views on the Fed's stance for further interest-rate hikes. The Fed's focus is on inflation. The dollar remains strong.
Combined with other economic data we've seen recently, it's safe to say the Japanese economy is maintaining its upward trajectory.
The statement was a de facto acknowledgment that there is only a little room left for a further hike.
At this time last year, people were talking a lot about the U.S. twin deficits and predicted the dollar would decline in 2005. They were wrong.
The dollar really needs very strong economic figures to get momentum. I can hardly see such strong data coming out, including TIC data.
Investors have been pouring money into dollar-denominated assets this year, where returns are higher.
Worse-than-expected trade-deficit figures could be fertile ground for dollar selling. Amid the already dollar-bearish sentiment, the U.S. currency has a downside risk.
