Market is waiting…Rate dynamics and recommendation on EUR-USD and GBP-USD. by OpenForex.com

Market is waiting…Rate dynamics and recommendation on EUR-USD and GBP-USD.

06:53 03/24/2004

Market is waiting…Rate dynamics and recommendation on EUR-USD and GBP-USD. Equilibrium state is characteristic of the market for the duration of the last month. If you look at EUR/USD price chart, you can see ascending triangle, prices stay within the line frames of ascending and descending trend, which are the borders of triangle. Geopolitics continues to determine the world currency market situation and, first of all, carefulness of actions of its participants. Market is digesting the last world events and assassination of one of the leaders of Hamas, in particular. Here, the main pressure on the dollar is put by the threat of response actions of militants, who openly declare their intentions. Yen continues to demonstrate its strong positions that are supported by economic recovery that is growing at a high rate in the Country of the rising sun. According to majority of experts, Japanese currency strengthening trend will keep on going in the given conditions. It can even get stronger following March 31, which is the end of financial year. Prior to that monetary officials will restrain rise of national currency. In its turn, the rate can rise higher than 105 yen per dollar and can reach 100 yen per dollar by the end of the year. The president of Federal Reserve Bank in Chicago Michael Moskow made a speech at the financial conference in his county. “With the low inflation that we have, FRS can permit itself to be patient in terms of refusing supporting monetary policy”, - said Moskow, thus repeating the main point of FRS statement made on March 16. “However, the given policy can not be sustained endlessly”, - added Moskow, pointing to the fact that when economy grows at a high rate, Federal funs rate will have to rise to the level, corresponding to steady economic advance. Moskow admitted that, though, the level of unemployment showed the signs of reduction, creation of new working places in the U.S. was still disappointing. Number of working places in the U.S. economy still lacked 2 million in order to reach its peak value that was recorded in March 2001. When answering questions, Moskw said that FRS needed 150 000 increase in the number of working places per month to say that labor market returned to its normal state. Moskow did not say how many months of 150 000 increase would FRS need in order to arrive at the given conclusion. Though, Moskow was very optimistic in terms of prospective. “Many representatives of business say that soon they’ll need to hire new workers, if demand keeps high. That is why, I optimistically expect growth acceleration of new working places, as I think that economic growth would be quite strong”, - stated Moskow. Like the chairman of FRS Alan Greenspan, Moskow thinks that reduction in number of new working places in production sector of the U.S. is in the first hand connected to high rise in labor capacity rather than to exporting working places to the countries with cheaper working force. Like Greenspan, Moskow reminded that there had always existed concerns about exporting working places and such concerns are not new to the U.S. Thus, in 1980-s Americans were concerned about transferring working places to Japan, in 1990-s – to Mexico. Now, China and India occupied their place. “We’ve already seen that movie”, - said Moskow. No events in terms of economic new are expected today. Recommendations: that is why it’s better to stay out of the market today. Recommendations: that is why it’s better to stay out of the market today.

The forecast was created by trans1.