» High yielding currencies recover as risk aversion cools

Concerns that turmoil in the US sub-prime mortgage sector have spilled over into the wider credit markets prompted traders to buy Yen last week and earlier on Monday, closing carry trades. Along with credit worries and US economic data, currency trading may be impacted by pending interest rate decisions from the European Central Bank and Bank of England. The ECB and BoE are expected to keep rates on hold at 4 percent and 5.75 percent, respectively, this week, although both are still seen rising rates at least once more this year. In the United States, interest rate futures are building on last week’s gains and driving down the implied fed funds rate. Futures have fully priced in a 0.25% rate cut from the Federal Reserve by the end of 2007 and at least one more by June 2008.

Source : ACM

This entry was posted on Tuesday, July 31st, 2007 at 7:07 and is filed under ACM. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.