US Dollar Put Into Motion On Paulson Comments, Bernanke Mum On Policy

Paulson was open and direct this morning when he said that the yen is traded in an open and competitive market place and even though some do not like where the Yen is trading, it is the US’ job to fight for free competitive markets.  This is a clear indication that the US will not support official criticism of yen weakness.  The Japanese Yen has sold off against nearly all of the high yielders except for the US dollar where we continue to see profit taking.  For more on how the G7 meeting could impact the Yen, check out our Special Report.  Meanwhile the EUR/USD continues to range trade and we do not expect any breakout movements before the ECB monetary policy meeting on Thursday.  US productivity, unit labor costs and consumer credit could provide for some mild dollar driven market activity tomorrow.  Productivity and labor costs are expected to increase strongly while consumer credit is expected to contract.