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Forex · News · Forex ForecastsNEWS / Forex Forecasts |
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The FRS decision was not surprising…Rate dynamics and recommendations on EUR-USD and GBP-USD.
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10:58 08/11/2004
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The FRS decision was not surprising…Rate dynamics and recommendations on EUR-USD and GBP-USD.
As the FRS rate hike was expected, it did not influence the market in any special way. The Federal Open Market Committee raised its target for the federal funds rate by 25 basis points to 1-1/2 percent. Despite Friday data on non-farm payrolls’ reduction, that opposed growth in productivity, the FRS had taken cooling measures and raised the rate target. Let us remind that the given measure is taken in conditions of robust growth in productivity so that to avoid inflation and overproduction crisis.
In many ways, the given measure was caused by rise in oil prices and inflationary pressure put on the U.S. economy as a result of that. Yesterday, light crude exceeded $45 a barrel at New York trades. Though, as the session closed the price went down to $44.5 but testing and overcoming the level of $45 was a painful one for the market. In London, Brent crude dropped by 0.3% at the ISM market. Continuous militant threats in Iraq and YUKOS oil company’s situation keep prices high. Readiness of OPEC countries to make concessions to the largest oil consumers, as the U.S. and the EU, and to raise OPEC quota produced no effect on the market so far.
Meanwhile, the U.S. Department of Trade reports that growth in productivity remains high, though lower than that in the first quarter but still higher than the forecasted values. Growth made up 2,9% against the previous 3,7% and the forecasted 2%.
Recommendations: stay out of the market, keeping in mind previous recommendations.
Recommendations: stay out of the market, keeping in mind previous recommendations.
The forecast was created by trans1.
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