2006 is likely to be a year when the dollar will struggle. We think the Fed is now very close to a peak. |
It's a case of shifting fundamentals and pricing in a rate cut. |
We anticipate one further rate hike to 5.0% in May, and Fed funds to remain stable at that level into 2007. Interest rate markets are now pricing in some chance of a move to 5.25%, which we believe to be unfounded. |