The fed new temporary program can solve the liquidity problems of the sub-prime mortgages in compensate of treasury bonds. The markets were in wait for the action and directly pushed Dow future about 280 points giving support to the greenback in a back trust wave of taking risk on a stemming off these causing problems of the current US slowdown growth and credit crunch as recently the housing and crediting problems weakened the lending operations between bank exacerbating the credit conditions and the join action can give back stability and trust after the mortgage exposure loses. There are expectations currently that the worse of the crediting problem has become behind of us after the news. The funding action can lower the market expectations of further aggressive cuts by the fed but the market is still expecting further cuts to stimulate growth may be in a slower pace than what was expected by the 200bln funding actions and the central banks new coordination.
Excessive trading volatility conditions contained the forex market after the news but the greenback could get benefits especially versus the Japanese yen as an equity market surge and trust to take risks on the central banks actions but the single currency is expected to hold much of its gains as the recent upbeating ZEW figures which rose to
-32 in March which indicate that the main ECB worries should be the current above 2% target inflation rate as the good news came after better than expected IFO figure last month shows improvement in the germane economy and optimism that the growth will be as potential as what the ECB Member Weber ensured.
By God's Will, we want to see later this week, Feb US retail sales which is expected to be negatively impacted by the consuming slowdown to grow by a slower pace than last month by just.2% m/m and also by the end of the week US Feb CPI as an important indicator of the inflation outlook as weak rate can help the fed to continue its easing pace and shows the negative impact of the slowing demand as what Fed's vice president Kohn has expected recently just by the up breaking of
1.50.Best wishes
FX-Recommends FX Consultant Walid Salah El Din E-Mail: snipped-for-privacy@fx-recommends.com