December?

Fixed?
To nobody's great surprise FIFA has admitted that the allocation of football's world cup is rigged. The 2018 event had already been awarded to Russia by the time the FA spent £21m on making England's case. There must be similar suspicions about the setting of US interest rates.

A couple of months ago the word on the street was that the Federal Open Market Committee would take the first step towards higher rates at its September meeting. The robust performance of the US economy made the timing look logical. But it did not happen. And yesterday the Fed appeared to admit that it has already decided what its decision will be in two months' time.

Of course, the FOMC could change its mind between now and then, just as FIFA might have changed its mind about Russia's world cup if the FA had invested its £21m more cannily. But the wording of yesterday's policy statement was as clear a signal as possible that US rates will begin their long journey north on 16 December. The dollar reacted positively, strengthening by a cent and a half against the euro and by a cent against sterling.

Not the winner
Given the scale of the US dollar's instant advantage it might come as a surprise that it was not the day's strongest currency performer. As a result of gains earlier in the day the Canadian dollar came out on top and the British pound lost no more than a net half-cent to the Greenback.

The US dollar's success is more evident over the last seven days, during which there is no doubt as to its supremacy. It is up by more than a cent and a half against sterling and by an impressive four cents - 3.6% - against the euro. Over the year to date the US currency is also the top performer, having gained 2% against the pound and 9.0% against the euro.

The two questions now are what the dollar will do between today and 16 December and what it will do afterwards if the Fed delivers the expected rate increase. Investors cannot indefinitely buy it in anticipation of higher rates: there ought to come a time when they take their profits by selling off speculative holdings. But what would they buy instead? The list of attractive alternatives is not a long one.

US GDP
In the light of yesterday's Fed announcement investors will take a close interest in today's figures for third quarter growth in the States. The dollar has potentially more to lose from disappointing data than it has to gain from impressive numbers.

The statement did concede that the FOMC would not be immune to the ecostats emerging over the next two months. Any marked deterioration in the economic picture would therefore be seen to prejudice the expected rate increase.

Today's other ecostats include UK mortgage approvals and the CBI's retail sales survey. Good results could help sterling higher against the euro.