MARKETS LOOKING MORE CAUTIOUS AS DOLLAR CONSOLIDATES

An air of caution is beginning to come over markets as the huge run higher on the dollar consolidates with it beginning to run out of steam. For the past couple of days now the excessive moves higher on Treasury yields have begun to settle down and although the dollar briefly pushed above the key resistance of 100.5 on the Trade Weighted Dollar Index yesterday (to reach its highest level since 2003) there is a feeling that some of the steam is beginning to go out of the dollar bull run. Whether this turns out to be the beginning of a near term corrective move, or just a pause for breath remains to be seen but there are a few signs of exhaustion on technical charts such as the Dollar/Yen and Euro/Dollar, whilst gold has been consolidating for the past few days. Equity markets are also showing signs of caution again.