US interest rate rise looks closer (page 2 of 2)

The dollar surged to a high of 110.45 against the yen on the last trading day as the market took comments from Fed official Poole to suggest Fed tightening could be more aggressive than it had been anticipating. In the coming week, the yen is likely to trade on a cautious note, with focus on the release of inflation numbers from the U.S.

Range for the week: 109.00 - 112.00

Sterling

Sterling fell more than one percent against the dollar as the greenback surged higher across the board.

The pound dropped to a two-week low against the dollar after comments from St. Louis Fed President William Poole that the Fed must raise faster than present expectations if inflation accelerates.

In addition for the pound, after Thursday's quarter point interest rate hike by the Bank of England, sterling positive news had been priced in, leaving it with no fresh impetus to move higher.

Meanwhile, news that Prime Minister Tony Blair's Labour Party was projected to have come third in local elections appeared to have had little impact on the pound.

Blair's public ratings have plunged over the past year and although media speculation about his future as Labour leader heats up periodically, political analysts still think he will lead his party into general elections expected in 2005.

Sterling markets face a big week in terms of data and events next week, with British finance Minister Gordon Brown and Bank of England Governor Mervyn King set to address the annual Mansion House dinner for City bankers on Wednesday.

The market will be watching for any hints from King about the pace of Bank of England rate hikes. May consumer price data will be released on Tuesday, unemployment on Wednesday and retail sales on Thursday.

Range for the week: $1.8000 - $1.8300