Cable is firming toward to top end of its intraday range, boosted by a dip in the core PCE deflator to 2.2% y/y, just marginally above the Fed's 2% comfort zone. With the inflation trajectory on a downward path, dealers believe the Fed will be able to react to sub-trend growth at some point in the first half of 2007, though the timing remains an open question.
A weak, two-touch hourly downtrend is eyed on the hourly charts in cable, sitting right near session highs of 1.9680. 1.9700, 1.9725 and 1.9750 are all resistance levels on rallies.
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