Euro rallies on ECB rate rise hint
ECB President Trichet statements dominated the market yesterday after delivering surprisingly hawkish comments following a widely expected unchanged rate decision- leaving its key lending rate unchanged at 4%.
He indicated that some ECB officials argued for rate hike later this year, and that the central bank is in a state of "heightened alertness" over inflation. This caused the euro to strike back on foreign exchange markets on Thursday, bringing a speedy end to the US dollar's Bernanke-inspired rally while also advancing strongly against sterling.
This straight talking about the exchange of opinions by the ECB board members leading up to the rate decision suggest that there is an increased possibility of a rate hike in July/August.
On the back of a weaker dollar yesterday, Crude oil closed up $5.49 on the day.
The Bank of England also left rates unchanged at 5% on Thursday and is expected to remain on hold for some time as the country faces the combined effects of slowing economic growth and soaring inflation.
However, while most economists agree that near term inflation expectations will probably keep the BOE from cutting rates in the near term, expectations of a further deterioration in economic conditions is likely to bring rate cuts back on the table by year-end. Time will tell.
The US non-farm payrolls report is out today, this is one of the most critical releases for the US dollar, not only because it is market-moving, but also because it can help us gauge the broad status of the economy.
Currently, the consensus estimates are for a drop of 60K, which would mark the fifth consecutive month of job losses. Regardless of how payrolls fare, the news is likely to spark significant volatility.
The National Bureau of Economic Research believes that over the past 3 decades, the US economy has gone through 3 recessions. In each of those 3 recessions, there was a string of job losses that lasted for a minimum of 10 months.
So far, non-farm payrolls have fallen negative for the past 4 months, and the May report is anticipated to bring this tally up to 5.
Some argue that the current downturn in growth could be more severe than the recession in the early 2000s due to the triple blow of a housing crisis, credit crunch and skyrocketing commodity prices.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
He indicated that some ECB officials argued for rate hike later this year, and that the central bank is in a state of "heightened alertness" over inflation. This caused the euro to strike back on foreign exchange markets on Thursday, bringing a speedy end to the US dollar's Bernanke-inspired rally while also advancing strongly against sterling.
This straight talking about the exchange of opinions by the ECB board members leading up to the rate decision suggest that there is an increased possibility of a rate hike in July/August.
On the back of a weaker dollar yesterday, Crude oil closed up $5.49 on the day.
The Bank of England also left rates unchanged at 5% on Thursday and is expected to remain on hold for some time as the country faces the combined effects of slowing economic growth and soaring inflation.
However, while most economists agree that near term inflation expectations will probably keep the BOE from cutting rates in the near term, expectations of a further deterioration in economic conditions is likely to bring rate cuts back on the table by year-end. Time will tell.
The US non-farm payrolls report is out today, this is one of the most critical releases for the US dollar, not only because it is market-moving, but also because it can help us gauge the broad status of the economy.
Currently, the consensus estimates are for a drop of 60K, which would mark the fifth consecutive month of job losses. Regardless of how payrolls fare, the news is likely to spark significant volatility.
The National Bureau of Economic Research believes that over the past 3 decades, the US economy has gone through 3 recessions. In each of those 3 recessions, there was a string of job losses that lasted for a minimum of 10 months.
So far, non-farm payrolls have fallen negative for the past 4 months, and the May report is anticipated to bring this tally up to 5.
Some argue that the current downturn in growth could be more severe than the recession in the early 2000s due to the triple blow of a housing crisis, credit crunch and skyrocketing commodity prices.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Labels: ECB, euros, interest rates, unemployment, US recession
posted by Wise Money @ 1:12 PM
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