Forex: weekly review.[M]

The dollar headed for a weekly gain against the EUR (+1.4%) and Yen (+1.5%). Last week was the first since 7 April the USD grew against main rivals.
A government report showing faster USA inflation prompted traders to bet the FED will continue raising rates Federal Funds 25 years диаграмма Federal Funds 50 years диаграмма.
The sentiment was changed due to official comments from Europe and USA, as to economic data. On Friday the head of Bank of Japan Toshihiko Fukui said that "the Bank didn't determine the time of rate increase." On Thursday Richmond FED President Jeffrey Lacker stressed "after strong CPI the 'pause' in FED's policy less probable".
As to statistic data the CPI rose in April 0.6% versus +0.4% in the prior months. But "core" CPI growth (ex.food and energy) became the main catalyst. The indicator grew 0.3% above forecast +0.2%.
In Fed statement after 10 May FOMC meeting policymakers said in future rate decisions will depend on fundamentals. Thursday's Philly FED showed increase in a price component to a high level since October 2005. Together with consumer price index growth it testifies to increase of inflationary pressure.
According to FED futures the probability of rate increase on 29 June to 5.25% is 60% against 42% in the beginning of week.
According to ZEW Research Institute ZEW диаграмма, index of business confidence fell to 50.0 in May against forecasts in 60 and 62.7 month earlier. Recently the euro became stronger thanks to signs of economy expansion in Eurozone pointing to the continuation of rate rise in Europe. Weak data can put into question the stability of economic growth and fuel the concerns about further ECB policy. Christian Noier said "inflationary pressure in region amplifies, that confirm opinion on further rate hike in Eurozone". Clause Libsher told in interview to Financial Times, that " further tightening of ECB monetary policy is necessary ".
Voices of MPC members of BoE on last meeting were divided, for the first time in last 8 years. The Minutes showed that 6 members, including Bank Governor Mervin King, voted for leaving rate unchanged at current level 4,50 %, but David Walten has voted for immediate rate increase on 0,25 %, and Steve Nikkel supported rate decrease.
Committee members pointed on manufacturing growth. They also said economy can strengthen in future.
We can't rule out, dollar appreciation can accelerate this week. Market remains overweight with short positions on American currency and the profit fixing can prompt the further strengthening of the USD.