The dollar will still be unsettled slightly by the Tuesday FOMC minutes, although
the US currency was able to gain some support from the fact that… … the Fed will
continue to tighten policy in the short term. There was also a suspicion that
markets had over-reacted on Tuesday, but the minutes could still prove to be an
important watershed for the currency. The underlying market position will be more
balanced than in recent weeks given that there is a strong probability of a
Euro-zone interest rate increase in December. The fact that an end to US rate
increases could be in sight will also tend to lessen dollar buying interest.

The US data was mixed and failed to offer major direction. There was a bigger than
expected increase in jobless claims to 335,000 in the latest week, but the overall
evidence suggest that the labour market is still firm. The University of Michigan
consumer confidence index increased to a final 81.6 for November from a provisional
79.9. Given that there will be a greater element of uncertainty over US interest
rate trends following the Fed minutes, the markets will be more sensitive to
near-term growth indicators. The dollar will be vulnerable to further selling
pressure if there evidence of weaker consumer spending. The principal feature is
likely to be increased uncertainty and the potential for volatile trading as rate
trends are debated.

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