EUR/USD: Eyeing Firmer US Yields; Talk of Hawkish Consultant

Dealers note talk of a hawkish report from a New York consulting shop saying the Fed is more likely to hike than ease, following along the same reasoning used by Lacker earlier. No matter how unfashionable that view may be, the Fed is thought to think the weak third quarter is a soft-patch which will be followed by a resumption of growth into 2007. EUR/USD has eased to 1.2713 from the mid-1.2720s. Bids are eyed at 1.2700; stops are eyed in the 1.2690/95 area. Bids return toward 1.2665/70. US bond yields have edged up to session highs at 4.69% in 10"s on the report.