Background for the first week of June

US dollar:

Dollar seems to be more stable, three reasons helped dollar to find some ground in recent days:

1- Relatively brighter economic data: Although the outlook is not clear but some people believe that the recent data are not as bad as many analysts expected.
2- Relative stability in oil market: Price of oil closed above 127 $/barrel on Friday, still a high price, but remember that a week ago no body could say that how high the price will go.
3- More emphasis on Inflation concerns from the Fed: Dallas Fed president Richard Fisher reminded us about the spiral effect from wage rising on inflation of the late 1970's, and made clear that policy makers were determined to prevent that from happening.


British pound:

The British pound might be much weaker if the outlook of inflation was not so cloudy, especially when the source of uncertainly is in outside of the economy. Analysts share such concerns with Mervin King and this is why the response to falling home prices and deteriorated consumer sentiment has been so limited.