Dollar is the boss today

The Dollar dictates terms today as international currencies adjust themselves around yesterday's words from Fed Chief Ben Bernanke.

To the backdrop of poor housing data and increasing inflation, the Sterling suffered losses across the board, dipping below the psychological threshold of 1.96 on Cable and hovering at a low of 1.266 on the Euro. This is most probably due more to the lasting effects of 'Black Monday', rather than any major resurgence in the greenback. The PMI services figure is just out lower than expected at 49.8 but all eyes will be on BoE's rate decision due tomorrow.

The Euro has held steady recently, but could see some fluctuation later today in reaction to the release of data on retail sales within the bloc. All indicators suggest that these figures will mark an improvement in consumer confidence, so the Euro could well experience a mild rally as the day wears on.

The Dollar has reacted gallantly to Bernanke's 'mildly hawkish' words yesterday, and has perhaps been spurred on also by a minor lull in oil prices. The resurgence could continue today, depending on the Non-Manufacturing Composite Index stats due for release in the afternoon. With Bernanke marking the evening with another speech on the US economy, the Dollar could be in for a good day today.

In the Southern Hemisphere, the red-hot Australian economy continues to harbour the threat of inflation, as GDP figures show productivity to be far higher than expected. The Aussie remains in largely good shape, but this will be seen in a better light with the release of import and export statistics tomorrow morning. In neighbouring New Zealand, the NZD Dollar follows suit from the AUD, losing a little ground against the greenback though. Analysts will be keenly waiting on the release this evening of the RBNZ's interest rate decision.