The news in general was still favorable, but the focus is on what's next. People aren't only looking at the progress in the war in Iraq, they're starting to think about what's going to come after. |
The overall case for Australian dollar weakness is still in place with a steady interest rate outlook in Australia and a diminishing interest rate spread against the U.S.. |
There is enough strength in this report to suggest at least one more hike from the Fed and possibly more. |
This might be a slight dollar negative. The key was the core which was bang on expectations at 0.2 percent. So there's not much inflation there. |
We saw some support at 120.70 yen, with the higher dollar/yen trend still in place and any kind of pullback should be relatively shallow. |
We would hope that [the ISM] is sending the correct signal, and the details suggest it is; but it's wise, given the fact that businesses are being cautious about investing, to wait until this result is validated [by other data]. |
Yields were very important in 2005; we think they'll be important again over the early part of 2006. Over the first half of the year we think the dollar will do a little better on interest rates. |