Discussion in 'Finance, Property, Law' started by Forces_Sweetheart, Jun 30, 2004.
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Bang goes those fantastic exchange rates......
Maybe, maybe not.
British nominal interest rates have been rising too and Bank of England says more hikes are coming.
Sterling/US$ still trading over its fifty day moving average at $1.807. Sterling has been climbing steadily against the buck since Spring '03.
Nothing in this post is to be regarded as a recommendation as to currency speculation.
Bank of England expected to impose another rate hike next week. From 4.5% up to 5%.
"UK House Prices Are '30% Overvalued'"
Pound/US$ still trading above 50 day and 200 day moving averages, although dollar has rallied somewhat since beginning of this month.
If there is a rise in August I'd be surprised if it was more than .25%. Although the Bank needs to keep the heat out of debt, it will be reluctant to prompt any sharp downturns. Also, the swaps rates, which measure the cost of money for longer term interest rates, have started reducing month on month for the first time in nearly a year.
It's a tricky time for the MPC - it will be interesting to see what happens...
Did it again.
Federal Reserve Open Markets Committee today raised the federal funds rate by 0.25% to 1.50%.
And again today, up another 0.25%.
This hike was widely anticipated in the US financial press.
In a seeming paradox, share prices and gold prices rallied ahead of the hike and stayed up after the announcement.
Another seeming paradox: the DXYO dollar cash index contract, a proxy for the value of the US$ on the foreign exchange market, fell ahead of the announcement and stayed down afterwards.
Not just yet perhaps.
From the Dow Jones Newswire, 26 September 2004:
"LONDON....U.S. President George Bush is being urged to signal a dollar devaluation of up to 20% to rebalance the global economy ahead of Friday's Group of Seven and International Monetary Fund meetings in Washington, the U.K.'s The Business newspaper reported.
"Senior U.S. administration officials in Washington have over the past few days tried to influence the White House and U.S. Treasury to put pressure on the G7 to agree to a dollar depreciation in its final statement, the newspaper said."
It is stated that worry over the soaring U.S. current account deficit inspired this suggestion.
The Federal Reserve System today announced an increase of twenty-five basis points (0.25%) of its target for the inter-bank overnight loan rate known here as the federal funds rate. Today's announcement raises the target rate to 2.75%.
"Fed Raises Rates to Check Inflation" by Jeannine Aversa. 22 March 2005
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