The dollar ended another week of breaking new record lows against the Euro when reaching to 1.4967 on Friday. The Fed lower the growth expectation to 1.8% -2.5% for 2008 from 2.5% to 2.75%.
The downgrade of the economic outlook released by the Fed, emphasized the vulnerability of the world biggest economy. The sub prime crises the deepening recession in the housing market and the credit crunch are expected to stall the world biggest economy. Fears from recession are prompting speculation that the fed will cut the rate in the coming meeting by 0.25%. Citi bank US biggest bank forecast the rate to be at 3.5% until March 2008 and Meryll Lynch predicted it to be at 2% by June 2008.
The US leading indexes closed a third negative week when the European peers closed lower the strait forth week. The negative sentiment in the equity market and the growing concerns and uncertainty about the credit crunch and its affects on the world growth initiated some risk aversion by the investors. The unwinding of the carry trade causes some big loses upon the NZ dollar and the Aussie against the yen. If the positive ending on Friday will continue into next week we might see a slow come back of the higher yielding currencies vs. the Yen.
This week contains some market moving data: consumer confidence, durable goods, existing and new home sales, the Beige Book report, US GDP, personal income, personal spending, Chicago PMI and housing sells. Euro zone and German CPI are due for release next week. They could be particularly market moving because high numbers will indicate that the ECB aims correctly while weaker numbers might raise question whether they are putting their focus in the wrong places. We are also expecting the German IFO report, retail sales, unemployment and Euro zone Retail PMI. - by Benny Menashe of stocktips.in/
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