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Forex · News · USMarketNEWS / USMarket |
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Market equilibrium…Dynamics of rate and recommendations on EUR-USD and GBP-USD.
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08:44 03/18/2004
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Market equilibrium…Dynamics of rate and recommendations on EUR-USD and GBP-USD.
Quotations still remain within tight currency corridor.
Despite the fact that objective fundamental data presupposes stock market sentiments vector to be directed against dollar, dealers are still uncertain about that.
Yesterday, Alan Greenspan confirmed economic course of monetary policy, which means that strong dollar policy is not yet supported by officials. On Wednesday, FRS chairman Alan Greenspan addressed before the participants of Bank conference that took place in San-Diego, California. The address was carried-out via satellite communication. “Weakness of credit quality that accompanied recent recession was, no doubt, quite mild for banking system in a whole and the system remains to be strong and well-prepared for satisfying clients’ needs for credits and other financial services”, - said Alan Greenspan at the beginning of the main part of his address. “In the last three or more years, banking industry continued getting high and even record-high profits, saved its historically high coefficients of capital adequacy and showed high growth of assets in a whole”, - continued Greenspan. “The branch and bodies watching it were quite in time for paying attention to decrease of standards of credits’ quality, which accompanied mature phase of the last period of economic growth and their timely interference was reflected in moderate volume of further write-off of credits compared to profits. In fact, the volume of problem assets in commercial banks was reducing every last quarter and the scale and the number of banking bankruptcies was rather low in the last years”.
Decision of ECB and data on British economy supports European currencies against dollar. British minister of finance Gordon Brown forecasts growth of British GDP to be on 3%-3.5% in 2004-2005 and on 2.5%-3% in 2006. According to his words, “British economy is getting stronger this year”. When coming out with annual budget message in Parliament, G. Brown noted that Britain was experiencing “the longest period of steady economic growth in the last 200 years”. In 2003, British GDP increased on 2,3% compared to 2002. Last year, Brown forecasted the given indicator to be on the level of 2-2.5%, while majority of analysts thought it to be 1.9%.
Economists note that expected economic growth might result in interest rates’ increase. By Bank of England estimations, economy can rise on 2.5% per year only, not resulting in inflationary leap. Citigroup economists expect that, in average, the rates would increase on 0.25 interest-bearing points every three months in 2004.
Confidence in Eurozone economy does not need stimulation by means of reducing interest rate, said the head economist of ECB Itmar Issing in his interview to German magazine Capital. The given interview was published on Wednesday. “Key interest rates are on the level of historic minimum and equal zero with an allowance for inflation”, - said Issing. The head economist of ECB also added that he saw “no further need in actions” that would result in stabilizing sentiments by means of reducing the rates.
The reason of investors’ passivity and market equilibrium are fears of players, caused by terrorist acts threats.
Recommendations: previous recommendations remain in power.
Recommendations: previous recommendations remain in power.
The forecast was created by trans1.
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