Forex outlook of March 2, 2011

  Yesterday, the U.S. dollar had an excellent meeting, erasing the losses of recent days against the euro. Geopolitical events in the Middle East have contributed to risk aversion, benefiting both the yen and the greenback. The U.S. dollar has also benefited from a rapid rise in the ISM manufacturing index, which reached its highest level since 2004. Ben Bernanke's remarks before the Senate Banking Committee have also to everyone's surprise, allowed the dollar to regain ground. Commenting on rising raw materials including oil prices, the Fed chief said that this increase will not hinder the return to growth in the United States. Regarding inflation, Ben Bernanke took his earlier remarks, acknowledging a slight increase in the index of consumer prices but does not worry either. In the end, the dollar closed up 0.2% against the euro.   Amid mounting tensions in Iran between the supporters of the opposition and the regime, the yen also erased its losses against the European single currency.   Good performance also for the pound sterling as the currency rose above 1.63 dollars for the first time since January 2010 after an unexpected rise in property prices across the Channel, which has increased speculation of higher interest rates by the BoE .   Finally, Russia has announced yesterday the expansion of the fluctuation band of the ruble to fight more effectively against soaring consumer prices.  Today the economic calendar is very lightly loaded with essentially the results of the ADP survey this afternoon. These figures will be particularly important because of the publication of the next weekly claims for unemployment benefits and mainly non-farm payrolls Friday will have a major impact on financial markets. It is likely that events in the Arab countries continue to influence the behavior of investors, pushing the safe haven, including gold, and promoting the rise of black gold. Thursday's meeting could possibly be more beneficial to the euro if the words of Jean Claude Trichet are in the direction expected by traders.