US Dollar Loses Ground - Will We See A Break Lower on Thursday? The US dollar continued its December slump against the euro, British pound, and Swiss franc on Wednesday but gained versus the New Zealand dollar and Australian dollar, as the commodity currencies ran into formidable resistance. For what it’s worth, the greenback continues to consolidate below its November highs, making it difficult to call for any sort of directional moves. This is similar to what we’ve seen in the US stock markets, as the Dow Jones Industrial Average and S&P 500 have climbed from their November lows, but have failed to break above key resistance levels. News that headway was being made on a bill to allow a $15 billion bailout loan to be made to GM, Chrysler, and Ford did little for the markets, as such legislation faces heavy opposition and may not even pass a Congressional vote. That said, event risk will pick up a bit on Thursday as the US import price index is anticipated to have contracted a record 4.9 percent during the month of November, bringing the annual rate down to a more than six year low of -2.0 percent. Such a change would be the result of plunging commodity prices and the stronger US dollar, and will add to evidence that inflation pressures are falling rapidly. Furthermore, the news could add to speculation that the Federal Reserve will cut rates when they meet on December 16, as fed fund futures are already pricing in a 75 basis point cut to 0.25 percent. As a result, there is potential for the US dollar to weaken on Thursday, and perhaps even break out of its recent trading ranges.
