Daily Market Report

The US dollar is broadly stronger this morning after Fed presidents Fischer

Wed, May 7 2008, 12:21 GMT
by Wachovia Research Team

Wachovia


The US dollar is broadly stronger this morning after Fed presidents Fischer and Hoenig commented that further rate cuts are unlikely as inflation pressures are mounting. Hoenig also suggested that when the Fed is ready to raise rates it may do so rapidly. In the Eurozone, retail sales and German industrial orders data came out significantly lower than expected, adding to the recent downturn in European economic data. When European Central Bank (ECB) officials meet tomorrow morning they may back off from their recent hawkish language to reflect greater concern over economic risks. Market participants still expect the ECB and Bank of England to keep rates on hold tomorrow.

Commodity linked currencies are trading relatively strong as crude oil remains near record highs. Although credit conditions in Australia seem to be worsening, and data out of the Canadian economy indicates further weakness, both currencies are performing well against the US dollar. If commodity prices, particularly crude oil, continue their trend higher these currencies will remain well supported.

Data released today include MBA Mortgage Applications which came in at 15.6%, Nonfarm Productivity, Unit Labor Costs, Pending Home Sales, and Consumer Credit. Fed Governor Kroszner will speak on foreclosures at 8:45 AM EST and Paulson will be speaking on the US economy at 10:00 AM EST.

Published on  Wed, May 7 2008, 12:25 GMT

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