Cyprus-Forum.com

[dinos]

http://www.financialmirror.com/more_news.php?id=8724

Some UBS analyst sees EUR/USD topping out at 1.45. I think the pair has short-term upside to 1.4650. After that, though, the pair will correct for technical reasons which will be augmented by fundamental concerns. All this said, I don't parity in the pair's future; I just can't see it dropping below 1.20 or so (although this is based on gut feel; using technical analysis to predict the future is like reading Nostradamus for the same).

Your thoughts?

[Sotos]

There are rumors that the Fed will reduce the interest rate further due to the trade deficit with China and the increase in the price of oil. On the other hand the Euro is expected to become about 12% stronger when it will be introduced in Cyprus since billions of rubbles are expected to be laundered within the first 6 months of 2008. Around May-June 2008 it should be at about 1.63-1.72.

[boomerang]

No doubt the US will suffer more as their woes haven't bottom out yet.

[dinos]

There are rumors that the Fed will reduce the interest rate further due to the trade deficit with China and the increase in the price of oil. On the other hand the Euro is expected to become about 12% stronger when it will be introduced in Cyprus since billions of rubbles are expected to be laundered within the first 6 months of 2008. Around May-June 2008 it should be at about 1.63-1.72.

Thanks, Sotos. Yes, the Fed cutting interest rates will cause USD to depreciate which will shorten the current account deficit. I can't say I agree with doing so to combat high oil prices though. Because that's an inflationary factor, interest rates would be raised to combat it.

Moreover, because oil is priced in dollars, the deteriorating $ is causing a significant majority of our dandily increased oil prices. You're right - the Fed is expected to cut rates (either tomorrow or December) as interest rate futures bear out. But that's already priced into EUR/USD. A rate cut won't significantly move the pair in and of itself. What will do it is a perceived act of desperation, or hellfire and brimstone by Bernanke; for example, cutting both fedfunds and the discount rate, or doing so by a significant amount like 50bp. That's why the pair moved so drastically in September when Uncle Ben hacked away at anything in his path. The fact that he said he wouldn't and then did was rather odd too.

As far as all the money laundering goes, a little humor is always appreciated.

Cheers...

[dinos]

http://www.ft.com/cms/s/0/14fddb84-872d ... ck_check=1

"By Jude Webber in Buenos Aires
Published: October 30 2007 21:26 | Last updated: October 30 2007 21:26

Cristina Fernández, Argentine president-elect, has vowed to restore credibility in the country’s official inflation figures by copying US data-gathering methods, in an attempt to calm fears about government manipulation of statistics."


This is absolutely classic.