The Euro was hit after an index of German business sentiment came in close to a one-year low, prompting investors to increase year-end Dollar buying. Large institutional investors helped pushed Sterling below the 2.0000 for the first time since September, with traders pricing in another interest rate cut after minutes from the Bank of England’s last meeting this month showed unanimous support for a cut to 5.5%.
Volumes were typically light ahead of year-end and Forex traders said that exaggerated some of the price action. The trading ranks are likely to think out further as the week goes on, b (more…)
An unexpected fall in a US Mid-Atlantic manufacturing activity index weighed on the market already pressured by a persistent credit crunch and prompted investors to avoid risky carry trades.
Concerns that the credit fallout was spreading to other market segments mounted late Wednesday, with Standard & Poor’s revising its outlook downward for major bond insurers Ambac Financial Group, MBIA Insurance Corp and XL Capital Assurance. Yesterday, MBIA, the world’s largest bond insurer, said it had exposure to $30.6 billion in complex mortgage securities that it ensures, an amount that exceeds its en (more…)
The Dollar rose against the Euro on Monday, boosted by year-end transactions as well as speculation that US inflation may cause the Federal Reserve to be less aggressive in cutting interest rates next year.
But tight credit conditions and fear of slower US growth weakened the Dollar elsewhere, with the Yen and Swiss franc rising as investors unwound carry trades that involve borrowing these currencies to fund purchases of higher-yielding assets.
The Fed is still expected to lower rates in 2008 to shield the economy from a slumping housing market, but analysts think price pressures could force (more…)
ECB injects 348 billion euros at 4.21%; BoE injects only ?10billion. The Bank of Japan begins the final policy meeting of the year today with Governor Fukui clearly concerned about the effects of the US downturn on the Japanese economy. US Treasury Secretary Paulson reiterated that the turmoil in the housing market still weighs on the economy and growth will continue to be effected. (more…)
