22nd of November 2008
 

MARKET REPORT 3rd MARCH 2008

Good Morning,

Sterling matched an all-time low versus the euro and eased versus a soft dollar this morning as investor’s expectations of interest rate cuts from the Bank of England mounted. A series of weak consumer and housing data last week increased the possibility that the Bank of England may cut rates on Thursday despite market consensus for rates to be kept on hold at 5.25%. A decline in manufacturing activity has also helped to paint a negative picture for the UK economy.

In the US , economic woes have heightened speculation the Federal Reserve could slash overnight rates by another 75 basis points before the end of the month to 2.25 percent and take rates below 2 percent by the end of the year. Traders also worried about hedge funds being forced to liquidate assets following news that several U.S. banks have seized control of failing hedge fund Peloton Partners.

The dollar's tumble comes before central bank decisions this week that will highlight the differences in how major economies are handling the U.S. slowdown combined with the surge in commodities and inflation.

Key data this week includes US manufacturing, Bank of England and ECB rate decisions on Thursday followed by US non-farm payrolls data on Friday.

Today we see manufacturing data for the UK , Euro Zone and the US with flash inflationary estimate for Europe due at 10 am.

Michael Ince


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