The Federal Reserve may lower its benchmark interest rate to 1 percent today, Tumbling commodities prices and weaker consumer spending are slowing inflation, which officials described as a 'significant concern' at their last scheduled meeting in September. Tomorrow, the Commerce Department will probably report that the economy shrank at a 0.5 percent annual rate in the third quarter. The Fed 'will be very aggressive,' said Mark Gertler, a New York University economist and research co-author with Fed Chairman Ben S. Bernanke. 'Inflation risks are off the table' and 'the issue now is how bad the recession will be.' The EUR/USD is currently trading at $1.2720 as of 8:29am, GMT.
The pound rose against the dollar and euro for a second day on speculation a rally in stocks will bolster demand for the British currency. A two-day gain by the pound versus the U.S. currency would be the first in more than two weeks as the FTSE 100 Index, a U.K. equity benchmark, soared 4.9 percent. Stocks surged yesterday in the U.S. and rose in Asia today. Chancellor of the Exchequer Alistair Darling will pledge extra borrowing today to support the economy as it enters a recession. The GBP/USD is currently trading at $1.6050 as of 8:47am, GMT.
Investors should buy the euro versus the dollar as global risk concerns ease, Citigroup Global Markets Inc. said, citing technical charts traders use to predict price movements. Investors who purchase the euro may gain as much as 4.2 percent as the 15-nation currency rallies from near a 2 1/2-year low, said Tom Fitzpatrick, head of global currency strategy at Citigroup Global Markets.
Economic Calendar
| Time (GMT) | E Event | Currency | Period | Previous | Previous | Significance |
|---|---|---|---|---|---|---|
| 23:00 | Leading Index m/m | AUD | 0.0% | |||
| 21:45 | Building Consents m/m | NZD | -7.9% | *** | ||
| 18:15 | Fed rate | USD | 1.50% | 1.25% | *** | |
| 14:35 | Crude Oil Inventories | USD | ** | |||
| 12:30 | Core Durable Goods Orders m/m | USD | Sep | -3.3% | -1.5% | **** |
| 12:30 | Durable Goods Orders m/m | USD | Sep | -4.8% | -1.3% | *** |
| 09:30 | Net Lending to Individuals m/m | GBP | Sep | 1.4B | 1.0B | ** |
| 09:30 | Mortgage Approvals | GBP | Sep | 32K | 32K | ** |
Daily Forex Fundamentals | Written by Finotec Group | Oct 29 08 09:34 GMT |
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