Emphasis on the Fed decision today along with German uncertainty and surging oil prices.
All eyes will be on the FOMC decision later on today, the big question being whether we will see an eleventh straight rate hike to 3.75% or a pause in tightening in the aftermath of hurricane Katrina.
The accompanying statement will offer the market guidance as to future moves by the Fed. The market will be looking to see if the central bank alters its pledge to raise rates at a ‘measured’ pace. The Fed’s comments will be important for the near term outlook for the dollar, a hike in rates could see the dollar strengthen given the uncertainty of what the decision will be.
Surging commodity prices yesterday were a key development. US crude oil rose to test $68 a barrel as the damage from Katrina further spilled onto US oil and gas production facilities, as well as transportation infrastructure in the region.
Fears that tropical storm Rita could wreak havoc in the oil-rich Gulf of Mexico, already battered by Katrina added to the woe. Gold prices hit 18 year highs, as worries of soaring US debt and subsequent dampening of the dollar filtered into the market.
The Euro was pummelled by investors as political chaos loomed in Germany following the election. The single currency sank to a low of $1.2101 before staging a modest rally to trade at $1.2155. It fell broadly against the yen, Swiss franc and marginally against Sterling.
The market looks ahead today, to the release of the German ZEW survey. A fall in expectations may well be witnessed as a result of the election and doubts about US growth.
In the UK yesterday, Stephen Nickell who sits on the Bank of England’s Monetary Policy Committee, said there is a ‘serious risk’ the British economy will not recover as strongly as forecast in August.
Focus will be on the minutes from the bank’s previous meeting on Wednesday to shed further light on these comments.
The accompanying statement will offer the market guidance as to future moves by the Fed. The market will be looking to see if the central bank alters its pledge to raise rates at a ‘measured’ pace. The Fed’s comments will be important for the near term outlook for the dollar, a hike in rates could see the dollar strengthen given the uncertainty of what the decision will be.
Surging commodity prices yesterday were a key development. US crude oil rose to test $68 a barrel as the damage from Katrina further spilled onto US oil and gas production facilities, as well as transportation infrastructure in the region.
Fears that tropical storm Rita could wreak havoc in the oil-rich Gulf of Mexico, already battered by Katrina added to the woe. Gold prices hit 18 year highs, as worries of soaring US debt and subsequent dampening of the dollar filtered into the market.
The Euro was pummelled by investors as political chaos loomed in Germany following the election. The single currency sank to a low of $1.2101 before staging a modest rally to trade at $1.2155. It fell broadly against the yen, Swiss franc and marginally against Sterling.
The market looks ahead today, to the release of the German ZEW survey. A fall in expectations may well be witnessed as a result of the election and doubts about US growth.
In the UK yesterday, Stephen Nickell who sits on the Bank of England’s Monetary Policy Committee, said there is a ‘serious risk’ the British economy will not recover as strongly as forecast in August.
Focus will be on the minutes from the bank’s previous meeting on Wednesday to shed further light on these comments.
posted by Wise Money @ 8:56 AM
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