Where Are The "Consensus" Dollar Bulls NOW?

The dollar bulls are really taking it on the chin again today. After the Japanese Tankan survey of business confidence, the yen rallied the most in 4 months against the dollar -- to 118.50 from about 120 late yesterday. I did write a few days ago (with the yen at 121) that the yen looks like the most undervalued of all major currencies against the dollar. A nice correction toward the 115 level may be under way, since the trend line at 119.50 was broken earlier today.

On a slightly different note, with the euro trading at 1.205, it is within a shout of my target of 121 by February 2006. I am surprised it got here as quickly as it did, but I guess it's December and even small price movements can be exacerbated by thinnish trading volumes (due to a lot of people taking off early from work, ahead of the X-mas holidays).

The Fed did its little semantic exercise yesterday, basically saying that "some further measured policy firming is likely". I have no idea why anyone would ever consider that statement to be "dovish" or "hawkish" for that matter -- my take on the whole thing is that the Fed has absolutely no clue what is going to be needed, hence they hedged their future actions both ways, if you will. Good thing they are not traders, because they probably won't make the cut with their willy-nillying. Gun to my head, my bet remains that the Fed benchmark lending rate is going to 4.75%, no matter what.