Archived IMT (2011.03.22)

28-month highs in UK CPI at 4.4% reinforces expectations of a 0.25% rate hike by the BoE next month, lifting cable to $1.64 to break past the 2007 trendline resistance. Wednesdays minutes of this months BoE meeting could further fuel the currency towards 1.6450s if they continue to show the 3 hawkish dissenters voting in favour of a rate hike in base rates (Sentence, Weale and Dale). EURGBP shied away from its 0.8770 trendline resistance (see HotChart http://bit.ly/gikAn3 ), making the barrier valid. Dallas Fed president Fisher reiterated his stance against prolonging QE2 beyond June, but the next FOMC meeting wont be until April 27. In order for USD to obtain a boost from such hawkishness into the April meeting, more FOMC members (such as Plosser) have to come forward and give markets a reason to expect actual dissenting votes, rather than voicing opinions regarding beyond June. USDCAD tests 0.78 after disappointing retail sales (-0.3% from -0.2%). Any deterioration in stocks could further support the pair towards 0.9850. More analysis on equity indices to follow next .