B
BenjaminFX
New Member
Monday 11st April 2011
Euro zone’s ‘One and done’ for Interest Rate Hikes
The months of speculation are now at an end as the European Central Bank raised interest rates on Thursday last week.
The first hike since July 2008, from 1 percent to 1.25 percent, it is widely agreed that although this move will help to stem rising inflation in the Euro zone, it will hamper the efforts to turn around struggling banks in the peripheral nations.
During the following press conference the President of the ECB, Jean Claude Trichet, said that the central bank would work to closely monitor the upside risk of inflation.
Despite his previous hawkish comments Mr Trichet commented that Aprils hike would not mark the start of a series of further hikes.
There seemed to be no market movement on the initial release of the ECB decision as most traders had priced in the hike as early are Monday 4th April. GBP/EUR remained in a tight range for the remainder of the week while the US Dollar fell sharply against both Sterling and the Euro.
Going forward, with little Euro zone data releases this week, and the now dovish stance of Mr Trichet, we should see the Euro slide back from its latest highs against Sterling.
US Dollar Decline as Obama’s Government fails to agree on National Debt.
The mighty Greenback has fallen against its main rivals following interest rate expectation and as US President, Barack Obama, fails to agree on a budget deal with congressional leaders.
Mr Obama will this week look to set out a comprehensive plan to reduce the nation’s debt by implementing spending cuts to the country’s Medicare system and call for a tax increase on wealthier Americans.
Measures will need to be put in place effectively and swiftly as the US national debt, nearly $14.3 trillion, will hit its legal limits in coming weeks, which will lead congress being asked to grant authority for additional government borrowing.
Such borrowing has been unpopular in the past but nevertheless necessary in past years. Congress voted a total of 7 times to increase the nation’s debt limit under President George W Bush.
Looking ahead, this week sees the release of some weighty financial reports which include Advance Retail Sales (Mar),Consumer Price Index (YoY),and the University of Michigan’s Confidence (APR). These reports are expected to highlight a slow but sure economic recovery in the US; however, without a sound fiscal policy it is doubtful that the USD will regain its recent losses.
Currency Pairs Current Mid-Rates at 9.00am
GBP - EUR 1.1291
EUR - GPB 0.8856
GBP - USD 1.6326
EUR - USD 1.4459
GBP - AUD 1.5453
GBP - CAD 1.5593
GBP - NZD 2.0827
GBP - CHF 1.4842
GBP - HKD 12.6845
GBP - NOK 8.8145
GBP - SEK 10.1405
GBP - ZAR 10.85
GBP - THB 49.09
GBP - AED 5.9959
GBP - MAD 12.7966
GBP - ILS 5.6165
GBP - TRY 2.4650
GBP - JPY 138.41
These are indicative rates, not buy rates
Benjamin Cole
Euro zone’s ‘One and done’ for Interest Rate Hikes
The months of speculation are now at an end as the European Central Bank raised interest rates on Thursday last week.
The first hike since July 2008, from 1 percent to 1.25 percent, it is widely agreed that although this move will help to stem rising inflation in the Euro zone, it will hamper the efforts to turn around struggling banks in the peripheral nations.
During the following press conference the President of the ECB, Jean Claude Trichet, said that the central bank would work to closely monitor the upside risk of inflation.
Despite his previous hawkish comments Mr Trichet commented that Aprils hike would not mark the start of a series of further hikes.
There seemed to be no market movement on the initial release of the ECB decision as most traders had priced in the hike as early are Monday 4th April. GBP/EUR remained in a tight range for the remainder of the week while the US Dollar fell sharply against both Sterling and the Euro.
Going forward, with little Euro zone data releases this week, and the now dovish stance of Mr Trichet, we should see the Euro slide back from its latest highs against Sterling.
US Dollar Decline as Obama’s Government fails to agree on National Debt.
The mighty Greenback has fallen against its main rivals following interest rate expectation and as US President, Barack Obama, fails to agree on a budget deal with congressional leaders.
Mr Obama will this week look to set out a comprehensive plan to reduce the nation’s debt by implementing spending cuts to the country’s Medicare system and call for a tax increase on wealthier Americans.
Measures will need to be put in place effectively and swiftly as the US national debt, nearly $14.3 trillion, will hit its legal limits in coming weeks, which will lead congress being asked to grant authority for additional government borrowing.
Such borrowing has been unpopular in the past but nevertheless necessary in past years. Congress voted a total of 7 times to increase the nation’s debt limit under President George W Bush.
Looking ahead, this week sees the release of some weighty financial reports which include Advance Retail Sales (Mar),Consumer Price Index (YoY),and the University of Michigan’s Confidence (APR). These reports are expected to highlight a slow but sure economic recovery in the US; however, without a sound fiscal policy it is doubtful that the USD will regain its recent losses.
Currency Pairs Current Mid-Rates at 9.00am
GBP - EUR 1.1291
EUR - GPB 0.8856
GBP - USD 1.6326
EUR - USD 1.4459
GBP - AUD 1.5453
GBP - CAD 1.5593
GBP - NZD 2.0827
GBP - CHF 1.4842
GBP - HKD 12.6845
GBP - NOK 8.8145
GBP - SEK 10.1405
GBP - ZAR 10.85
GBP - THB 49.09
GBP - AED 5.9959
GBP - MAD 12.7966
GBP - ILS 5.6165
GBP - TRY 2.4650
GBP - JPY 138.41
These are indicative rates, not buy rates
Benjamin Cole
