Forex: weekly review.[E]

As the last week showed the dollar continue lift and climbed to an eight-week high against the euro and strengthened versus yen and other currencies.
Weekly USD gain versus EUR made 1%. What is more significant its that the dollar has also overcame the pivotal technical resistance $1.2530 which it couldnтАЩt break for about several weeks.
The dollar rose on 1.1% against yen and climbed the maximum since April, 21.
The major reason for bullish sentiment upon USD was prompted by awaited Fed rates hike at least for two times by the end of current year.
Thus, the reason for such USD rally remain Fed representatives speech hinting Fed worry on current inflation data which has already overflow the comfort level.
The yen rose the most in more than 2-weeks against the dollar after BOJ Governor Toshihiko Fukui said policy makers need to adjust interest rates from near zero percent ``without delay.''
Later Fukui informed that there is no necessity to hurry up with this question and cooled bulls. Nevertheless nine from fifteen analysts surveyed by Bloomberg News expect the bank to raise rates as soon as July. Thus they believe BOJ can move its key rate to 0.5% already by the end of current year that will be the highest boost since 1998.
The yen led declines in Asian currencies today as the North Korean remarks raised on concern intention to continue test intercontinental rocket, and sharp reaction of world community have caused anxiety about increased military tension in the region. Growth of trade balance deficit in the South Africa and New Zealand became major reasons of sales by foreign investors of these countries currencies.
A proceeding falling in the stock markets of the developing economy countries also supported USD which now plays a role of save heaven currency/
Recently issued reports speak that E.U. economy remains not in the best form that brought extra pressure on EUR while its downwards.
Report showed that volume of EU industrial orders in April unexpectedly fell. Therefore decrease of EU industrial orders volume is observed for the 2nd month successively. In April orders indicator fell for the third time during this year.
U.S. economy data show rather deferent picture.
Last Fridays report Michigan sent. Index testified that for the first time since March of current year American buyers optimism gained.
Before that Labor Department informed CPI during for 3 months successively exceeded forecast value.
Issued on Friday Durable goods orders ex. transport data in May showed data increase the third months.
More is that some analysts assume Fed can boost its key rates on 50 b.p. by next week. The possibility of such rates hike estimates now in 12%.
The same time interest-rate futures show traders fully priced of an key rates move on 25 b.p. at June 29. There's an 83% chance of another quarter-point rate boost in August. Remind that prior week estimated such possibility in 67%.
Ultimately latest data decrease the fears US economy slow down and indicate the economy can withstand higher rates. Thus Fed is free for further monetary policy tightening to curb inflation risks.
Fed officials may signal the economy is robust enough to keep elevating key rates to curb inflation, said Mamoru Ashimoto, Shinsei Bank. This will boost dollar gains.
More is that some analysts assume Fed can boost its key rates on 50 b.p. by next week. The possibility of such rates hike estimates now in 12%.
The same time interest-rate futures show traders fully priced of an key rates move on 25 b.p. at June 29. There's an 83% chance of another quarter-point rate boost in August. Remind that prior week estimated such possibility in 67%.
Ultimately, the market focus will again be directed on deferential gap between EU and US rates.
One of the key upside risks is the Fed's message becomes even more hawkish, then we would see another bout of dollar appreciation,- said Monica Fan, head of foreign exchange strategy in London at RBC Capital Markets.
Recent tendency intends USD will continue strengthening, says Adnan Akant, Fischer Francis Trees & Watts, who operates $37 bln. of its assets.