| 3/21/2008
2:40 PM: EUR/$..1.5440 $/JPY..99.42 GBP/$..1.9814
$/CHF..1.0084 AUD/$..0.9012 $/CAD..1.0232
Thin Trading Dominates Holiday Session
The dollar continued to hold onto its gains from
recent sessions in a quiet holiday-filled Good
Friday session, with the major pairs locked in
range. The greenback trades just under the 100-level
against the yen and holds steady versus the euro
near 1.5450. The actions taken by the Fed this
week have, for the time being, stabilized financial
markets and tempered the hasty deterioration in
the value of the dollar from recent weeks. Additionally,
commodity prices have eased off record levels
? spot gold having retreated back beneath the
$1000 per ounce level to trade around $920/ounce
and crude oil back near $100 per barrel.
The Fed?s decision to cut by 75-basis points
to 2.25% earlier in the week combined with earnings
reports from Goldman Sachs and Lehman Brothers
tempered the fall-out from the Bear Stearns bailout.
Although markets had been eyeing a 100-basis point
reduction, the FOMC leaves the door open for another
rate cut at the April 29-30th meeting. We anticipate
a 50-basis point rate cut at the next meeting
bringing the Fed?s benchmark lending rate to 1.75%.
The US economic calendar for the coming week
consist of February new home sales, durable goods
orders, the final reading for Q4 GDP, consumption,
personal income, PCE index, and the March University
of Michigan sentiment survey. The final reading
for Q4 GDP is seen unrevised at 0.6% q/q.
We look for the dollar?s rebound to continue
against the majors, but view it as a short-term
corrective move. Our near-term targets are 1.52
against the euro, 1.96 versus the sterling and
101.50 versus the yen.
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