Geithner Comment Rallies U.S. Dollar; British Pound on Defensive

The U.S. Dollar is posting strong gains this morningfollowing comments by Treasury Secretary Geithner. In a speech, Geithnerpledged that the Obama administration will not devalue the currency.

The U.S. Dollar is posting strong gains this morningfollowing comments by Treasury Secretary Geithner. In a speech, Geithnerpledged that the Obama administration will not devalue the currency.

This morning the Dollar is trading higher, but still underyesterday’s high. Watch for an acceleration to the upside if 77.86 gets takenout.

The British Pound is on the defensive as traders takeprotection ahead of Wednesday’s release of minutes from the Bank of England’slatest monetary policy meeting. Long traders are paring positions on the notionthat the BoE’s minutes may suggest further monetary easing.

The BoE’s minutes are important because they will givetraders a good idea as to how close it is to announcing additional assetpurchases known as quantitative easing.

BoE members are also expected to express theirconcerns about further government spending cuts. Some feel that the economy istoo fragile to handle additional cuts at this time, therefore putting theeconomy in position to fall into another recession.