US Dollar strength continues
The prospects for US interest rates (rises) remained at the top of the agenda for financial markets yesterday as many awaited the Fed Chairman Alan Greenspan’s testimony on economic conditions to congress today and tomorrow.
Comments made by Mr Greenspan on Monday showed he felt the US economy was coping well with recent oil fluctuations. Interesting to note that global fund managers expect U.S. rates to rise to 4% before the Federal Reserve will stop tightening monetary policy – a Merrill Lynch poll showed yesterday. In its latest monthly survey of 300 portfolio global managers, Merrill found greater confidence about the outlook for the US economy in the wake of better than expected economic data.
The interest rate expectations helped push the dollar up against a host of currencies - in particular the Yen and Swiss reaching 14 and 15 month highs respectively. The euro also weakened against the greenback in spite of a strong business confidence survey from Germany’s ZEW Institute.
Just for good measure, the ZEW surged to a reading of 37 in July, well ahead of consensus expectations of 22 and the June reading of 19.5 – aided by the weaker euro, low Bund yields and stock market strength.
The pound was broadly weaker falling further against the euro and the resurgent dollar. Much of yesterday’s moves against the euro (and overnight in Asian markets by the look of it) were said to be caused by UK fund managers buying Amsterdam listed shares in Royal Dutch Petroleum ahead of the completion of the company’s merger with London listed Shell.
At 9.30am this morning attention will switch back towards UK interest rates and whether or not a rate cut could be forthcoming in early August. The Bank of England release the minutes from the last MPC meeting earlier this month. If you recall last time round the minutes showed 2 voting for a cut. All will be revealed as they say….
Comments made by Mr Greenspan on Monday showed he felt the US economy was coping well with recent oil fluctuations. Interesting to note that global fund managers expect U.S. rates to rise to 4% before the Federal Reserve will stop tightening monetary policy – a Merrill Lynch poll showed yesterday. In its latest monthly survey of 300 portfolio global managers, Merrill found greater confidence about the outlook for the US economy in the wake of better than expected economic data.
The interest rate expectations helped push the dollar up against a host of currencies - in particular the Yen and Swiss reaching 14 and 15 month highs respectively. The euro also weakened against the greenback in spite of a strong business confidence survey from Germany’s ZEW Institute.
Just for good measure, the ZEW surged to a reading of 37 in July, well ahead of consensus expectations of 22 and the June reading of 19.5 – aided by the weaker euro, low Bund yields and stock market strength.
The pound was broadly weaker falling further against the euro and the resurgent dollar. Much of yesterday’s moves against the euro (and overnight in Asian markets by the look of it) were said to be caused by UK fund managers buying Amsterdam listed shares in Royal Dutch Petroleum ahead of the completion of the company’s merger with London listed Shell.
At 9.30am this morning attention will switch back towards UK interest rates and whether or not a rate cut could be forthcoming in early August. The Bank of England release the minutes from the last MPC meeting earlier this month. If you recall last time round the minutes showed 2 voting for a cut. All will be revealed as they say….
posted by Drs Search @ 8:28 AM
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