MARKET REPORT TUESDAY 29^TH APRIL 2008

Good Morning,

Over the past few days the Dollar has improved against the Euro trading down to the 1.5560 level this morning as the Markets see the Fed moving to a more neutral stance after Wednesday’s close of the FOMC 2 day meeting. A rate cut of 0.25% is expected, but the expectations of any further rate cuts are not imminent. However, with oil prices at record levels and causing downward pressure on the Dollar, the possibility of a continued and consistant Dollar recovery over the medium term is reduced. Expectations remain that this week’ data on growth, consumption, manufacturing and payrolls are likely to show the US economy is still deteriorating.

In Europe the economic outlook appears to have weakened, whilst inflation pressures seem to have eased slightly with figures released last week showing German Business confidence dropped more than anticipated and Money supply figures came in below forecasts.

The Euro has reversed from its record high of 1.6015 in the expectation that the difference in interest rates between the US and Europe will narrow.   Germany ’s inflation rate dropped from 3.3% to 2.6% in March, which would leave room for the ECB to lower interest rates.  

Sterling still seems vulnerable with the prospect of lower interest rates later this year, but much of the negative news may  appear to be already priced into the exchange rate.

Michael Ince

Archive News

This commentary is generic and may not suit all circumstances. Before taking any action, we recommend either contacting your trader for guidance or obtaining independent financial advice. The information in this document was obtained from sources believed to be reliable but its accuracy and completeness cannot be guaranteed. The views and recommendations in this communication are typically short term trading views. Comments constitute views at the time of writing and are subject to change without notice. The rates shown are all indications. For specific quotations, please contact your usual trader. This document is not intended as an offer, solicitation or recommendation to buy or sell.