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Strategies & Market Trends : Currencies and the Global Capital Markets

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To: Henry Volquardsen who started this subject	1/10/2001 8:25:25 AM
From: friverola	of 3536

RBC's Stretch Sees Further Fed Interest Rate Cuts(Bloomberg) fxstreet.com Jeremy Stretch, a currency strategist at RBC Dominion Securities, comments on major currencies and interest rates: On euro-dollar: ``The market is cautiously optimistic about buying euros. The market will monitor U.S. stock futures ahead of market-moving data. There will be a correlation with the performance of the Nasdaq. We could see the euro fall below 94'' U.S. cents, he said. The downside risk is 93. ``The next few weeks will be volatile.'' Still, ``the trend of broad euro strength is likely to continue. We could see parity by the end of the summer.'' ``U.S. retail sales is the prime focus. There are some second- division numbers out of the euro-zone this week. I think euro-zone growth will outstrip the U.S. this year.'' He sees U.S. growth at 2.5 percent, compared with euro-zone growth at 3 percent. ``The European Central Bank will be prudent to sit on its hands for the moment. There's no justification to turn the cycle around'' and cut rates, he said. The Federal Reserve ``will cut 25 basis points at the end of this month and again in March. There's at least the prospect of another 50 basis points of cuts on the horizon.'' On the British pound and U.K. interest rates: ``The trend in cable will continue in the near-term. The (interest) rate spread with the U.S. is significant. The Monetary Policy Committee will leave rates at 6 percent till the middle of this year.'' He sees sterling-dollar trading in the ``upper $1.50s,'' while ``the euro is likely to outperform sterling this year, pushing towards 65 (pence per euro) at the end of the year.'' On the yen: ``The yen's move was temporary. We continue to see the Nikkei struggling and weak leading indicators. We may see the dollar squeeze back to 117. Euro-yen could be at 112 by the end of the week.'' fxstreet.com

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