Currency and Stock Markets Weekly Outlook
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About rates − again
Mon, Apr 7 2008, 10:45 GMT
by Przemysław Kwiecień
X-Trade Brokers, XTB
After another set of the weak US macroeconomic data, investors are focusing on a rate outlook again. Although the Fed will not meet this week, market is awaiting minutes from the last meeting, which are about to be published on Tuesday. Investors are wondering, why the Fed – cutting the reference rate by 75 bp – failed to meet market expectations of 100 bp cut and if members of the Committee might be afraid of further easing because of inflationary threats. The minutes will be followed by the BoJ decision (Wednesday) and meetings in the UK and Frankfurt (Thursday). While the BoJ and the ECB are broadly expected to leave rates unchanged, the Bank of England will probably cut rates by 25 bp.
The rate issues together with the US trade balance for the February (expected at –57,5 bln USD) released on Thursday may influence the moods on the forex market where the dollar is in a fairly good shape. Its enough to say that the US currency is at the same level to the euro and 1% stronger to the Japanese yen when compared to the levels just before the payrolls release (on last Friday). This reflects market’s hesitance regarding plausibility of a further sharp decline in a value of the dollar – at least in the short horizon. This sentiment is also favorable for the stock markets, which shrugged the poor employment reading and are set for a corrective rise – unless the Fed will surprise markets with some hawkish remarks.
Published on
Mon, Apr 7 2008, 10:45 GMT
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