Oct 29 2007
The Week Open With Fresh EUR/USD High Of 1.4420
Yesterday, the USD dropped to record lows against the EUR due to speculation that the Federal Reserve will cut interest rates later this week as the U.S. housing slump reverberates throughout the economy. Interest-rate futures show around a 90% chance that the Fed will lower its 4.75% overnight lending rate between banks by at least a 0.25% point on Wednesday. In addition, the greenback will find little support given the sharp rally in Crude Oil that has already reached the 92.60 level. Upcoming U.S economic data does not look to help the greenback either. The currency faces major risk this coming week with the release of the Consumer Confidence report, the GDP, the Manufacturing Index and the Non-Farm Payrolls. The aforementioned are expected to show relatively weak figures in comparison to previous months, thus dragging the USD further down. Facing a run of weak U.S. economic data, the USD may drop as low as $1.4500 against the EUR this week.
There could be some movement when former Fed Chairman Alan Greenspan speaks today at a hedge-fund summit in Bermuda. Short of that, there is no real market moving news to be released from the U.S markets. Volatility is soaring, and while the greenback is likely to remain weak and oil strong in coming days, all of this wild price action creates the potential for steep corrections throughout the market.
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