Currency Comment 3/2

U.S Dollar moved to new highs for the move Thursday.  The current bullish factor is the near universal expectation that the Fed will increase short term interest rates in March.  It is interesting that the Fed is playing catch up to the bond market which has moved interest rates up in the last few weeks.

Another factor in recent dollar strength has been the feeling that the new administration will usher in an increase in economic growth in the U.S.  A drop in tax rates and a roll back in government regulations is seen as an engine for growth.  Since the U.S. is already growing at a better rate than Western Europe, an increase in U.S. should cause pressure on the Euro currency.