European focus: strong economic data can support USD [E]

USD tries to compensate a part of last week losses, when the Fed lifted the rate at 25 b.p. in a 17th time, and in accompanying statement said that cycle of monetary policy toughening comes to the end. Futures market in recent time is pricing in 62% chance of the Fed will raise its rate to 5.50%. In the middle of last week this probability was 83%.

Strong economic data can support the dollar. ISM manufacturing for June will be published today.

Strong data can renew speculations on concern the U.S. economy will allow the Fed to continue interest rates increase to contain inflation. Fed accompanying statement especially emphasized, that the further actions of the central bank will depend on the economic outlook. Remind, expectations that despite interest rates gain the U.S. economy remains high pace of growth, became a reason of USD strengthening in last month at 1.2% against the euro and at 2.7% versus the yen. As expected, the U.S. Institute for Supply Management's will report today business confidence in manufacturing sector rose to 55 in June from 54.4 in May.

``If U.S. data should come out stronger, it could give the dollar a bit of a lift,'' said Carsten Fritsch, a currency strategist at Commerzbank AG in Frankfurt. The market now is overweighed by long position on the euro, which closing can lead to the euro's falling.