Well, after today's release of FOMC rate decision, I have seen both arguments for the likehood of next year's decision. Many would argue that in order to boost U.S. economy, a rate cut in March is imminent- especially so when the minutes said "susbstantial cooling" of the housing market and the mix data may suggest that the fed is not ready to raise rates.
However, one factor that we have to remember is that the U.S. is much of a service economy- 80% much, with only 15% in manufacturing. (Let's not forget ISM non service was well above 50) Although what it seem to be a stream of bad news for the lower in the last couple of weeks, the core inflation rate (excluding food and energy) is at 2.9%, well above the comfort zone of the Fed. Many see the U.S. as a slow growing economy and would see the Fed raise rates. With energy prices, we are at 1.3%.
So, in the up coming weeks and into 2007, what do you think the EUR, USD will do?
However, one factor that we have to remember is that the U.S. is much of a service economy- 80% much, with only 15% in manufacturing. (Let's not forget ISM non service was well above 50) Although what it seem to be a stream of bad news for the lower in the last couple of weeks, the core inflation rate (excluding food and energy) is at 2.9%, well above the comfort zone of the Fed. Many see the U.S. as a slow growing economy and would see the Fed raise rates. With energy prices, we are at 1.3%.
So, in the up coming weeks and into 2007, what do you think the EUR, USD will do?