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24 Apr 2013
Forex Flash: Rate cut expectations build - BBH
FXstreet.com (Barcelona) - Brown Brothers Harriman analysts note that weak economic reports and official comments have heightened expectations for rate cuts by the ECB, the Reserve Bank of Australia, and possibly the Norges Bank.
However, they note that the respective currencies have recovered from the initial weakness. They feel that their resilience may be an important indication that the US dollar is set to trade heavier. Following yesterday's disappointing PMI data, Germany's IFO confirms that the euro zone's largest economy has lost its luster and they note that the much-watched business climate component of the IFO survey fell to 104.4 from 106.7 in March. They finish by writing, “The Bloomberg consensus was for a 106.2 reading. The expectations and current assessment measures both fell more than expected.”
However, they note that the respective currencies have recovered from the initial weakness. They feel that their resilience may be an important indication that the US dollar is set to trade heavier. Following yesterday's disappointing PMI data, Germany's IFO confirms that the euro zone's largest economy has lost its luster and they note that the much-watched business climate component of the IFO survey fell to 104.4 from 106.7 in March. They finish by writing, “The Bloomberg consensus was for a 106.2 reading. The expectations and current assessment measures both fell more than expected.”