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As compared to the weaker American dollar the Euro registered a hike of around 1.538 The ECB probably will be keeping the interest rates at 4.00 pct Mr. Jean will also be discussing the risk aspects of rising prices. With the rise of the energy prices it advocates that increase of the consumers will continue to quickly rise in the euro zone. There was probability that ECB will be deserting their headline rates and it remained unaffected.

Mr. James who is an analyst with CMC Markets was of the view that if there is a relaxation in the monetary policies in Europe then it seems that it will remain for sometime. When compared the data available with ADP showed that during the month of February companies of American private sector has terminated more than twenty thousand jobs and it only has worsened the issue that is mainly related to the American economy. It also suggested that Federal Reserve will be reducing more interest rates.

Mr. James was of the view that with the help of overnight trade for Euro/dollar has touched than 1.50 level and it was also assisted by the American low economic condition and it has increased the pressure on Fed to decrease the rate in the FOMC meeting.  

The data of non-farm payroll of America will be closely monitored and if the American economy’s condition remained the same i.e. weak then it will not be a good sign for the dollar and can bring future losses. On the other hand the pound also gained as compared to the dollar getting close to the two dollar level. The fact cannot be denied that it remained below the euro.

Keeping in view the inflation the again the worries for the economy has showed up and around 5.23 pct of the interest rate was also fixed by the Bank of England. Until the month of May most of the market analyst said that necessary steps would be taken for further cutting of the rate of interest. 

Mr. James was of the view that the inflation will be a matter of great concern for Bank of England but the rumor that has been going for a while in the direction of quarter point in the second quarter. It would not be possible for Bank of England to sustain a dovish position after the next rate cut and it is well maintained by the dollar.

There is also bad news from Britain housing market where Halifax reporting a fall in the prices by around two percent in the month of February.

This entry was posted on Wednesday, March 12th, 2008 at 4:55 am and is filed under Forex News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.