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Posted by fxrecommends@gmail.com on January 28, 2008, 12:11 am
By God's will, we wait for the US fed's rate decision later this week.
After last week surprising .75% interest rate cut, we want to listen
to the fed's language to know how far they can go after this recent
cut. The market is expecting further cuts but it is split between
whether there is another cut or not this week.
The UK growth pace is expected to be negatively impacted too by the
same crediting problems of US after the sub-prime mortgage
undiminished problems and the increased probabilities of recession in
US but it's became clear to the market that the inflation upside risks
is to tackle the MPC following to the Fed's for spurring investment
bringing back the risk appetite and trust in the equity markets.
The growth worries are looking softer in EU and the ECB ensured that
they see this or want this! It is not clear yet! But the expectation
of a hike later this year has diminished after the ECB member Mersch's
comments that there are signs of growth weakness but the ECB has not
discussed but 2 options not 3 which are a hike or a keep of the
current interest rate but Last week disappointing 52.0 service PMI
ensured that there actually signs of growth weakness amid uneased yet
inflation risks and high energy and commodities prices can threat the
price stability in EU.
the Japanese yen can keep gaining from this current interest rate
outlook differential tightening, the mistrust in the stock market
especially after the huge loss of citigroup 4th quarter amid the
crediting problems and the increased expectations of a US recession
can spread out especially, If the US growth could not get uses of the
easing package of 150 Bln Bush's plan and the fed monetary easing.
By God's Will, The gold rates could keep its gains after the
surprising .75% Fed's cut getting back above 900 again versus the
greenback as the current market prospects of further interest rates
cutting persisting offering much more funds to the credit and
financial markets which can add to the gold value amid uneased oil and
commodities prices. The recent US inflation rates have reached the
fastest pace in over two years last November and were mild last
December as Dec Core CPI came as expected .2% m/m and 2.4% y/y. the
stagflation case is still possible which can add to the gold value
too.
Best wishes
FX Consultant
Walid Salah El Din
Mob: +20 12 465 9143
E-Mail: mail@fx-recommends.com
http://www.fx-recommends.com
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