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Posted by fxrecommends@gmail.com on March 17, 2008, 12:46 am
JP Morgan offer to buy Bear Stearns added to the market credit crises
worries expecting that the worse has not come yet and there can be
further write downs. We watch actual turmoil in the markets and a
great deal of uncertainty to push the gold higher further.
The fed cut the discount rate to 3.25% by another .25% and we wait
further dovish statements after the interest rate decision this week.
The current expectations reached cutting by 1% to stimulate growth and
bring funds to the tackled financial markets. Cutting by this massive
way can add further woes to the weak dollar across the broad. The
market has started this pricing after a weaker than expected inflation
pressure in Fed as it has came broadly unchanged and the core also
came unchanged and the market was expecting 0.2% increase for the Core
CPI and a 0.3% rise for the broad figure. The markets have seen the
data as a green light to the fed to cut further safely with a lower
than expected degree of upside inflation risks. It has become obvious
that the demand slow down affecting negatively in the prices. It is a
clear recession sign. The greenback is not expected to find a support
by this week strongly awaited Fed's meeting.
The single currency got benefits from the recent up beating series of
data as Feb ZEW figure which came just -32 and EU industrial
productions which surged in Jan m/m by .9% and the market was just
expecting .3% these data came after better than expected IFO figure
reached 104.2 last month showing an actual improvement in the germane
economy and optimism that the growth will be as potential as what was
expected in spite of the crediting crisis. The ECB Members' comments
are still hawkish towards inflation which can add to the interest rate
outlook of the single currency eliminating any market expectations of
a rate cut soon. But there is still concern that the recent Single
currency appreciation can be considered as a an excessive volatility
as Trichet has indicated clearly his concern of this pace of
appreciating and his eye on the forex market and he has mentioned the
US sticking to its US strong policy which could cap the single
currency and that's was by reaching 1.59 with the beginning of this
week!
Surely, the Japanese yen could gain on the unwinding of carry trade
and this strong wave of mistrust of taking risk but it is strongly
subjected to actual interventions as these new rates versus the
greenback in the Asian session which reached 95.73 by correcting above
96.00 again. The Japanese yen has repeated its decline for the third
consecutive week beginning as a spreading out risk aversion sentiment
in the equity markets.
By God's Will, We have today US Current account Q4 data and Mar NY
Empire State Manufacturing Index.
Best wishes
FX Consultant
Walid Salah El Din
E-Mail: mail@fx-recommends.com
http://www.fx-recommends.com
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