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Strategies & Market Trends : January Effect 2003 -- Ignore unavailable to you. Want to Upgrade?

To: RockyBalboa who wrote (596)	6/23/2003 11:21:36 PM
From: Jimbobwae	Respond to of 666

Dollar May Rise on Expectations of a Smaller Rate Cut From Fed June 24 (Bloomberg) -- The dollar may rise for a sixth day in seven versus the euro as an economic recovery in the U.S. may allow the Federal Reserve to lower interest rates tomorrow by a quarter point instead of a half percentage point. Government reports this week will probably show a rise in durable goods orders and new home sales, according to analysts. Germany's economy, by contrast, is stagnating and at risk from deflation, the Bundesbank said yesterday. The dollar has risen 2.3 percent in the past week against its European counterpart, trimming its six-month loss to 12 percent. The dollar was at $1.1548 per euro at 9:42 a.m. in Tokyo, from $1.1560 late yesterday in New York. It was also at 117.66 yen, from 117.76 yen. The yield on the July federal funds futures contract fell yesterday to 0.865 percent, indicating a 54 percent chance of a 50 basis point cut, down from 62 percent last week. A basis point is 0.01 percentage point. ``The dollar's going to continue to get a short-term bounce'' before the Fed meeting, said Greg Gibbs, currency strategist in Sydney at Royal Bank of Canada, the nation's largest lender. ``A 25-basis-point cut now seems more likely.'' The dollar may rise as high as $1.12 per euro within the month, before weakening again later in the year, he said. In a Bloomberg News survey of 150 analysts, 94 predicted the Fed will cut rates a quarter-point this week and 45 forecast a half-point cut. Eleven predicted the Fed would keep its overnight rate target at 1.25 percent. Fed officials are slated to announce their decision at about 2:15 p.m. Washington time tomorrow. `Deflationary Tendencies' The euro may decline after the Bundesbank said yesterday in its monthly report, ``some risk factors may well develop that lead to the possible emergence of deflationary tendencies.'' The Federal Statistics Office will probably say Thursday German import prices in May fell 0.5 percent from a month earlier, a third straight decline, according to the median forecast of 15 economists in a Bloomberg News survey. The report may add to concern that growth in Europe's largest economy may be threatened by price declines. Producer prices fell at the fastest rate in 10 months in May, a report showed last week. Germany's inflation rate last month fell to 0.7 percent, the lowest in 3 1/2 years, as the euro's 19 percent gain in the past year against the dollar helped cut import prices and as the faltering economy weighs on consumer and business demand. ``Negative prospects for the Europe's fundamentals are adding more pressure on the euro,'' said Minoru Shioiri, senior manager of the treasury and foreign exchange division at Mitsubishi Securities Co., the brokerage unit of Japan's third- biggest bank. ``People are beginning to pay more attention to the growth prospects.'' The euro, headed for a third day of decline, traded at 135.89 yen from 136.15 late yesterday in New York. The European common currency may fall to 135.30 yen today, Mitsubishi Securities' Shioiri said. In other trading, the British pound was at $1.6667 from $1.6680. The dollar hovered at 1.3246 Swiss francs from 1.3226. Last Updated: June 23, 2003 20:45 EDT

To: RockyBalboa who wrote (596)	6/24/2003 4:20:18 AM
From: Londo	Read Replies (1) \| Respond to of 666

The Hang Seng has been a pretty good leading indicator to the S&P 500 lately - it's down another 100 points today. On the next 200 point rise in that index, I'll go short - it's pretty clear that the post-SARS recovery has been over-done. As for equities, I see a couple conflicting stories, one involves mutual fund 'window dressing' which alleges that funds will buy the winners for the end of the quarter. I don't see how this can increase the indexes, however. The other is that this is 'normal profit taking'. I'm just remembering in the middle of August 2002 when the S&P reached 960, that this was the typical comment when the S&P backed down another 30 points. Profit taking to S&P 700 maybe? The EUR and ZB have been pretty silent this night - 1.1520 and 119 12/32 are quite far from my revised entry points of 1.1441 and 118 6/32. I suspect tomorrow and Wednesday (morning) will be quiet, just due to the Greenspan factor. The volatility should be in the equities. Oh, the CAD is at 0.7325.. missed my order by about 28 pips (reached 0.7278 I think yesterday). I'm not at all convinced that the US/EUR/JPY are done inflating their currencies yet - this could mean higher commodity prices yet in the future. As much as I think this country (Canada) is run by mediocre administration, we do stand to have our currency boosted with commodity prices and our relatively strong economy (not to mention our 12B+ current account surplus for Q1-2003 and interest differential). We can probably run the currency up to 80-85 cents before the bank of Canada will get smart and start buying USD and Yen. Why is oil still at 29 bucks a barrel? Iraq will finally be pumping in the near future once they clear up the pipeline security issues and OPEC won't be obeying their quotas as usual. The whole point for Bush to invade was to get the price of oil down - right now that doesn't appear to be successful.