Though this week will start with US market holiday, much volatility is anticipated as the week goes, with four central bank rate decisions featured (ECB, BoE, BoC, RBA), non-farm payroll, as well as a number of important economic indicators. Credit is tighter for all but conforming mortgages and that implied tighter credit for the economy, including including higher-yield spreads, reduced credit issuance, greater risk aversion and increased volatility in financial markets. Trichet has signaled a rate hike by using the coded word “strong vigilance” in Aug’s press conference but markets speculate that ECB will postpone that rate hike due to recent turmoil in the financial markets. On the other hand, Bernanke’s speech was taken as another indication that Fed has opened the door for a rate cut in the Sep meeting and the outcome will very much depends on the upcoming batch of economic data, in particular the NFP. read more
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