Dollar Eases

Dollar Eases, Awaits Fed Speeches
by Korman Tam

The greenback relinquished some of its gains versus the euro and yen, falling to 1.5752 and 106.64 by the New York afternoon. Last week's payrolls report, while disappointing, was largely in line with expectations and tempered fears that the non-farm payrolls figure would reflect a similar amount of job losses as seen in the ADP private sector report. The US economic calendar this week is light, consisting of May pending home sales, weekly jobless claims, trade balance, and the July University of Michigan consumer confidence survey.

Fed speakers will dominate the headlines this week, with Chairman Bernanke and Richmond Fed Governor Lacker slated to speak today. Despite Lacker issuing hawkish commentary in recent months, the sole dissenter voting for a rate hike at the FOMC's June meeting was Dallas Fed President Fisher. Traders will closely on the comments from both Bernanke and Lacker for hints on whether the Fed will tighten policy as early as August. Given the persistent weakness in both the labor and housing market, we do not anticipate a Fed shift toward a tightening policy until Q4, at which point we look for only a 25-basis point hike.