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24-03-2009
USD/EURO, huge rebound to be expected
| After last week huge sell-off, originated by various measures of quantitative easing by the Fed - its balance sheet. will roughly total 4 Trillion dollar by year end, slighgtly less than one third Us GDP- it looks as if Bce is now under increasing scrutiny to adopt equivalent measures. Weber, the once hawkish member of Bundesbank and one of the main culprit for the delay at which Europe has started dealing with this crisis, is now pressing for further cuts in interest rates, presumably worried by the very weak performance of German economy. Further contraction means decreasing fiscal revenues and yet more balooning budget deficits. We would therefore expect the Euro to return very briefly below 1,30 to subsequently approach l,20 by year end. |