Will Fed Do The Unexpected And Leave Rates Unchanged!! | Forex Factory

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Will Fed Do The Unexpected And Leave Rates Unchanged!!

  • #1
  • First Post: Oct 26, 2007 2:22pm Oct 26, 2007 2:22pm
We can see next week no fed rate cut, if so, omg where will go Euro next week! 300 pips downside in few hours it is a possible scenario!
1.4440 could well be the EurUsd top for next 12 Months.
My bet it is for rate unchanged!
I hope so, because I have several shorts from 1.4180.

I know I am almost the only one with this bet, but my Crystal ball is shinning!!
  • #2
  • Oct 26, 2007 2:25pm Oct 26, 2007 2:25pm
i doubt the fed will leave rates unchanged
Twitter: @forexpokerpro
  • #3
  • Oct 26, 2007 2:28pm Oct 26, 2007 2:28pm
Quoting BoredToLoose
We can see next week no fed rate cut, if so, omg where will go Euro next week! 300 pips downside in few hours it is a possible scenario!
1.4440 could well be the EurUsd top for next 12 Months.
My bet it is for rate unchanged!
I hope so, because I have several shorts from 1.4180.

I know I am almost the only one with this bet, but my Crystal ball is shinning!!
What are your reasons for no change?
  • #4
  • Oct 26, 2007 2:44pm Oct 26, 2007 2:44pm
Maybe it is time to scalp the equities Markets! Just Kidding!

Some Comments by FOMC Members are showing some emerging divisions!

AND

Don't forget Christine Lagarde Comment "Beware one way bet"

ECB will act next year if Euro do not start to reverse, that's for sure!!
They will start to cut rates!

There is the possibility to see now only a reverse to 1.38 and then see Euro again at +1.46 at Year end , but in my opinion 2008 we will see 1.20's again.
  • #5
  • Oct 26, 2007 3:53pm Oct 26, 2007 3:53pm
Quoting BoredToLoose

ECB will act next year if Euro do not start to reverse, that's for sure!!
They will start to cut rates!
A task of a central bank is not to control currencies evaluation thru interest rate. From an economist point of view, currency rates are an efect of monetary policies decided by them(central banks).

Cuting rates only for the euro to drop is like changing a hole car of a flat tyre. There are hundreds of way a central bank has to influence it's currency, but after my oppinion, adjusting interest rate to fit the currency view, it's the last they choose.

Interest rate are increased/cut to adjust the bussines cycle(aka fight inflation and create a wealthy future for it's country)

Hope i helped...
"Abandon all hope, you who enter here" La Divina Commedia, Dante Alighieri
  • #6
  • Oct 26, 2007 6:42pm Oct 26, 2007 6:42pm
Quoting semar
A task of a central bank is not to control currencies evaluation thru interest rate. From an economist point of view, currency rates are an efect of monetary policies decided by them(central banks).

Cuting rates only for the euro to drop is like changing a hole car of a flat tyre. There are hundreds of way a central bank has to influence it's currency, but after my oppinion, adjusting interest rate to fit the currency view, it's the last they choose.

Interest rate are increased/cut to adjust the bussines cycle(aka fight inflation and create a wealthy future for it's country)

Hope i helped...
Sure you help,

So, what you are telling me is that Fed will cut rates next week to create a wealthy future for his country.
Wall Street will for sure thanks Mr.Bernanke for not forgot them!!

Well, if FED Cuts rates and Dollar sunks, maybe if ECB do the same they can Sunk Euro too, am I right!
This EurUSd value it is artificial, there is something behind it, USA want it to be like this and only because Europeans leaders are weak!
Big European corporates are starting to be hurt because strong Euro.

Let's see what market will do if the cut will be only for 25 points.
Maybe Mr.Bernanke next time cuts all at once for 2008!:

bye
  • #7
  • Oct 27, 2007 1:45am Oct 27, 2007 1:45am
Quoting BoredToLoose
Sure you help,

So, what you are telling me is that Fed will cut rates next week to create a wealthy future for his country.
I'm not telling you the Fed will cut rates, all I'm telling is that the euro-zone won't cut rates only to adjust eur/usd value
"Abandon all hope, you who enter here" La Divina Commedia, Dante Alighieri
  • #8
  • Oct 27, 2007 2:03am Oct 27, 2007 2:03am
Will the Fed cut or not cut rates? Whatever the case, the suspense sure is killing the markets. :

We really do not know what the Fed is thinking, however, the recent U.S. Existing Home Sales is more than enough evidence that a rate cut is needed. The U.S. economy is definitely slowing down, and although a rate cut may not stop a recession, it can help make the inevitable a soft, gentle whiplash rather than a hard, brutal concussion.
  • #9
  • Oct 27, 2007 2:28am Oct 27, 2007 2:28am
The Fed would be crazy not to lower interest rates. We need to spur consumer spending, especially for the holidays. With the price of oil just
days away from $100 a barrel and the mortgage crisis looming, we need some
economic growth. I cannot see any inflationary pressures at this time. My
bet is for the Fed to lower rates by 50 points.....
just trying to make a little on a lot.....
  • #10
  • Oct 27, 2007 4:03am Oct 27, 2007 4:03am
The FED will cut and they will do it hard. 50 BP.

They have no other choice. BTW: The US want a lower dollar as it lowers their liabilities, too.

Regards - Xaron
  • #11
  • Oct 27, 2007 4:51am Oct 27, 2007 4:51am
Quoting Xaron
The US want a lower dollar as it lowers their liabilities, too.
I totally agree with you, evem if secretary Paulson yels each day that US needs a stronger dollar.

From my point, untuil the subprime problems, Fed said it's greatest risk is inflation (they where saing it for at least 6 month) and when the subprime appeared, suddenly the risk of inflation disappeared, even if all comodities prices are raising. Not to menion the enourmos amount of money they pumped in the system. Strange isn't it?

Again, from my point, in the current situation I don't see any rate-cut any soon, but neither a rate-increase
"Abandon all hope, you who enter here" La Divina Commedia, Dante Alighieri
  • #12
  • Oct 27, 2007 6:30am Oct 27, 2007 6:30am
I agree there should be no rate cut. However, Bernie failed to prove himself as the strong academic scholar he was described as upon his introduction as FED chairman.

Inflation is high in the US, the numbers are rigged IMO. Oil is almost $100, commodity prices are much higher than last summer, and you got a sinking dollar that raises import prices...How can inflation be low???

Anyways, the stock market pimps will get their cut and Bernie the whore will give it to them.

Bad times for the dollar.
  • #13
  • Oct 27, 2007 6:44am Oct 27, 2007 6:44am
i think they will cut for 0.25 or no cut, i hope for a cut...
its just money
  • #14
  • Oct 27, 2007 10:09am Oct 27, 2007 10:09am
I guess no cut because the Fed need a bit more time to evaluate the impact on the last high rate cut...
  • #15
  • Oct 27, 2007 10:54am Oct 27, 2007 10:54am
Hmm... interesting to see the different meanings. I'll stay out of the markets until thursday.

Regards - Xaron
  • #16
  • Oct 27, 2007 4:55pm Oct 27, 2007 4:55pm
Quoting Xaron
BTW: The US want a lower dollar as it lowers their liabilities, too.

Xaron,

Before I disagree with you, I would appreciate it if you extrapolated on that.


BTW, the market has priced a 25 bps cut at 80% now...we are due for some strong short-term turbulence if they don't cut anything.
  • #17
  • Oct 27, 2007 5:15pm Oct 27, 2007 5:15pm
There is no chance of there not being a rate cut. The markets have priced it in and it would be very damaging to the US Domestic Markets if there was no cut.

It will be a quarter point (25), because there was not enough time between the last rate cut to see the impact the first cut has had on the market.


I agree with the original posting that if there is NO cut there will be a correction 300 pips on the Euro. I think that if there is a half point cut, then the euro is going to be pushed even higher against the dollar.


A weak dollar is good for American business right now, becuase it helps keep jobs at home and increases demand for American products.

For political reasons it helps to post a low trade deficit each quarter, and with the cost of the Iraq war being funded on loans, a weak dollar also offsets heavy intrest rates we are charged on those loans.


I will bet my life (but not my money lol) on a .25 rate cut, news traders will rape the USD lower for about 3 hours, and then a heavy USD rebound after profit taking and people realizing that the the EUR is overvalued and the rate cut was not half point that the news traders wanted.
  • #18
  • Oct 27, 2007 6:29pm Oct 27, 2007 6:29pm
market watch: overview for the last week
  • #19
  • Oct 28, 2007 10:25am Oct 28, 2007 10:25am
Quoting snowman
The Fed would be crazy not to lower interest rates. We need to spur consumer spending, especially for the holidays. With the price of oil just
days away from $100 a barrel and the mortgage crisis looming, we need some
economic growth. I cannot see any inflationary pressures at this time. My
bet is for the Fed to lower rates by 50 points.....
You have me confused here a bit. FED cut by 50 points would surely get oil above USD 100 and keep it there for a sufficient time for the refineries to stop absorbing the costs of high oul prices and start passing it onto the customer in the form of gasoline above USD 3. This surely would wipe out any "gains" for the consumer in terms of a cheaper credit (and it's the consumer who is the questionmark in this game). At the same time, the outflow of cash denominated in USD fixed assets would change into a flight, sending the commercial rates higher (and not lower) - thus actually adding to the credit crisis and not helping to solve it.
  • #20
  • Oct 31, 2007 10:28am Oct 31, 2007 10:28am
ADP jobs and GDP were good. I think it will be 0-25 bp. Nearly 0% chance of 50 bp cut I think.
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