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USD and interest rate cut speculation
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I believe Friday’s interest rate cut speculation was an illusion. I do not see any rate cut in 2007.Friday’s rallay was too speculative. On Monday, we will receive important signals to see whether interest cut is possible or not.
The dollar was flat against major currencies on Monday, off last week's one-month high, ahead of U.S. inflation data this week and speeches from Federal Reserve officials that could give signs to whether an interest rate cut is likely. If we get another weak signal from the core (CPI) number that's going to be a signal to sell the dollar. But it's too soon to talk about a rate cut. If growth stays sub-trend longer, the Fed is going to be nudging towards the first stage of taking out its tightening bias.
The high-yielding New Zealand dollar jumped from last week's one-month low against the U.S. currency after robust consumer spending data and stabilizing stock markets rekindled flows into riskier assets.
In recent sessions the dollar recovered from a two-year low against a basket of currencies as investors sought more data to back up expectations for a Fed rate cut.
The focus is on comments from Dallas Fed President Richard Fisher and Atlanta Fed's Dennis Lockhart who are speaking at separate events on Monday ahead of U.S. consumer prices data and Fed chairman Ben Bernanke's speech later in the week.
By 0730 GMT, the euro was steady on the day at $1.3532 keeping its distance from its all-time peak above $1.3680 set in April.
The dollar was unchanged at 120.28 yen having hit a two-month high last week. It was also off its one-month high set last week against a basket of major currencies.
The euro was slightly higher at 162.78 yen, less than one yen away from its all-time peak set earlier this month.
The kiwi dollar was up 0.3 percent at US$0.7370 having earlier closed in on a 22-year high near $0.75 hit in April.
New Zealand's retail sales posted their strongest quarterly rise since the data series began in 1995, reviving talk of an interest rate hike from 7.75 percent, already the highest among industrialized economies.
BOJ EXPECTATIONS
The yen briefly edged up against the dollar after data showing Japanese wholesale prices rose more than expected in April, keeping the Bank of Japan on track for an interest rate increase later this year.
Expectations are mounting for the BOJ to lift rates to 0.75 percent from the current 0.50 percent in the third quarter, with swap contracts on the overnight call rate pricing in a roughly 80 percent chance of a move in September.
Data on Thursday is forecast to show solid Japanese economic growth in the January-March quarter and help set the stage for a BOJ rate hike following elections for Japan's upper house of parliament in July.
So far the yen has suffered despite the end of zero rates in Japan because yields abroad are so much higher, prompting Japanese investors to shift more funds overseas and market players to keep using the yen for carry trades. |
| Tarih
: 15.05.2007 |
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Copyright
© 2006 Mert TOKER All Rights Reserved. |
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