From the December 01, 2006 issue of Futures Magazine • Subscribe!

Rough sledding for the dollar

The U.S. dollar has been trending lower since mid October. But in mid November, it seemed to solidify on a strong jobs report. Then, when the U.S. trade deficit narrowed to $64.3 billion from August’s record high of $69.9 billion, it sparked a breakout above 85.56, only to be crushed later in the day when China’s central bank governor announced the country would diversify its currency reserves, favoring euros versus U.S. dollars.

Ashraf Laidi, currency analyst for CMC Markets US, says the dollar is likely heading to between 84.30 and 84.50, which he attributes to the end of the U.S. tightening cycle, while the market anticipates rate hikes from the European Central Bank and the Bank of Japan.

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