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Dollar continues its rally

Pending home sales come in above market predictions following on from the recent impressive data that has come out of the US over the last week or so.  It is looking as though the world's biggest economy is going to stave off recession and dealers will be eagerly awaiting every piece of data released to see if the current trend continues.

The main reason though for the dollars continued run against the Euro was a reaction to the speech given by Mr. Trichet after the ECB decision to leave rates on hold. Mr. Trichet defended the recent rise in Euro interest rates as he was still concerned about inflation but admitted that it has had an impact on economic growth in the Eurozone and he didn't expect this to improve in the near term.

Sterling eased against the dollar after the BoE left rates on hold and the Halifax House price index once again fell dramatically last month. Today there is no significant data out of Europe and once again dealers will be looking towards the US Labour costs, productivity and wholesale inventories due this afternoon. It looks as if it could be another busy day on the markets to round off the best week the dollar has had for a long while on the exchange markets.

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