Here's what I think is a pretty good set-up for the $ this week:

The int rate is coming out on Wed.. Few economists expect it to change in 5.25%. Friday's CPI numbers were in consensus. The PPI is coming out Tue.. Most economists expect the PPI to maintain quite a few say and consensus . If the PPI is in better or consensus , of course the market will be that the rate won't be increased. Since everyone expects that, there might not be too much preliminary movement, (even though an intial move remains possible so be prepared for it). Watch the dollar at this point for a negative move. If 25 drops pips so, brief it.

I am hopin the dollar does not move too much after the PPI and the market waits for the rate on Wed.. After the rate is annonced, if there hasn't already been a big bad move, here is what I think will occur in the hours afterward: The market will interpet that the in-consensus data and the non-move in the interest rate as meaning not only is there is almost no additional likelihood of a rate increase, but there is a fantastic probability that there'll be a rate decrease in early 2007. It is very possible that the $ will take a major hit, especially from the EUR and Cable. The EUR could go nicely and even hit 30, with cable moving into the 89's. If there is not any big move the transfer will occur gradually over 1/2 -3 hours. So the plan is to be ready for a big preliminary move, but when that does not happen, see the $25 and if it 25 pips or so from where it had been before this rate annoncement, brief it.

The only thing that would upset this scenerio, is if the dollar drops all week and hits those amounts by Wed before the rate announcement. This could be possible because alot of people do expect the numbers to maintain consensus and traders may sell. I think the evaluation will be what happens to the dollar after the PPI. You are going to get to see the $ week, but as I said, if the PPI is in consensus or better AND the $ does not make a major negative move before the rate announcement, it's very likely to do so afterward, but probably it will happen over a few hours. Good luck.

Your opinions please?