I think it's inevitable that Governor Fukui will indicate we're that bit closer to the end of quantitative easing but I still think the message will be one of relative caution.
Following previous moves by the Federal Reserve, the market pretty much immediately looked ahead and had a confident view on the interest-rate outlook for the next two meetings. That's been a supportive factor for the dollar. Now it seems to be different.
The market has already come to the conclusion that the medium-term impact of Katrina will be negligible if not net positive, therefore weak figures in the near term won't have any bearing. The market is now looking for a Fed move next week.
The market is now beginning to look beyond the potential first step in terms of a shift from quantitative easing to interest rate targeting.
A consensus reading is not going to continue to support the dollar.
The consensus is that we are definitely going to war and it's probably two to three weeks away, no more than that. We can take it as a given that the Bank of Japan is in the market at or around 117, so that the low we have tested in the past at 116.80 remains intact.
Overall sentiment hasn't changed significantly, obviously we've had a reversal and the selling has ceased temporarily... But the strength of the dollar has been relatively modest.
There has been a shift this week towards expectations of another U.S. interest rate rise in March -- the interest rate differential is there and it is helping the dollar.
Given that the employment report will be released on Friday, the appetite for selling the dollar may be limited especially with the consensus for non-farm payrolls gradually creeping higher from the original reading of 200,000.
We could argue possibly that we've seen a little bit of stability since we've had the interest rate cut out of the way. Certainly the market is not as convinced over the need for further substantial monetary tightening in the UK.
