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This Week’s Money Market Update February 26, 2007

Posted by liverpoolchamber in Business, Custom House, News.
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Read the Custom House weekly money market update by clicking on ‘more’.

This week in the money markets –

GBP
Detailed Q4 GDP data are due in the UK on Monday and are expected to confirm an above trend growth rate of 0.8% for the quarter, with the services sector the main growth driver. Sterling got some modest support from yesterday’s news that business investment rose at its fastest pace in nearly a decade in the closing months of last year. However, moves were limited with sentiment continues to be undermined by talk that the Bank of England may not increase interest rates again.

EUR
The Eurozone should be the focus of attention on Monday with the leading German Info index due for release. The index fell for the first time in several months in January and another modest dip is expected this month. However, the index remains close to record high levels. Unemployment, Business, and Housing data all out this week, should be closely monitored for signs of Eurozone strength.

USD
The dollar retreated to a two-month low against the euro on Monday as the U.S. currency came under pressure on renewed worries about Iran’s nuclear programme. The dollar’s latest slip was partly due to the surge in gold and oil prices as Western powers were set to meet in London to discuss tightening sanctions on Iran amid a flurry of tough talk between Washington and Tehran. But traders also said they didn’t expect a sustained dollar move based on the Iran situation alone, especially with a slew of indicators this week on U.S. growth, manufacturing and inflation that will help shape expectations on the interest-rate outlook. The dollar has been hurt as investors believe the Federal Reserve is likely to trim rates from the current 5.25 percent later in the year, even as the European Central Bank seems set to raise rates further next month to 3.75 percent from 3.5 percent.

JPY
The Yen remains under pressure, sticking close to four year lows versus the dollar after the Bank of Japan outlined earlier in the week that it will be slow in raising interest rates.

In other news, BoJ minutes from the January meeting released this morning indicated board members Suda, Noda and Mizuno expressed concerns on rates being too simulative and voted for a hike. However, many board members expressed the view that although price-monitoring remains necessary, CPI may continue to fall in coming months. This indicates data up ahead may not be able to justify another pre-emptive hike in the near term. Looking ahead, this is a heavy data week for Japan, with industrial production, retail sales, nationwide CPI, household expenditures, and the jobless rate all due.

Disclaimer: Custom House has based this opinion on generally available information. Custom House makes no warranty of this information and specifically disclaims any liability for decisions based on the opinion herein contained.

Comments»

1. gbp currency - May 31, 2007

gbp currency

I Googled for something completely different, but found your page…and have to say thanks. nice read.


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