The central banks in EU and UK are still stuck between stimulating the
economy and fighting inflation. It the same situation in US the
reports came mixed showing the need for holding for a while. Further
cuts in US means further boost to the already boosted commodities
prices. But the crediting problems head and the sub-prime issues have
not ended and it can come up on the spot at any time among the
concerns of slowing growth expectations.
We have seen and mentioned that the 2.6% y/y EU CPI could increased
the market expectations of an Inflation pressure in Euro zone can
force the ECB to open the door for further single currency
appreciation amid these current high oil prices as the rate is away
from the 2% ECB target. It is a similar case in UK too and both
factors are helping their currencies appreciation for fighting
inflation which is fueled by the energy and commodities prices as the
interest rate outlook is still dovish anyway which supported the gold
rates back above 800 again by the end of last week as the increased
expectation of another interest rate cut by .25% by the end of the
year.
Best wishes
FX Consultant
Walid Salah El Din
Mob: +20 12 465 9143
E-Mail: mail@[EMAIL PROTECTED]
