Fed will raise rate starting March 2007 – US Dollar gets ready for a rally
Marla Guthrie
Nov. 19, 2006

The G20 call for higher rates is significant. The Federal Reserve statements are showing very early indication they expect the economy to have a soft landing. They are more concerned about inflation than recession.

That is the reason many Fed watchers are now saying Fed will be raising rates three more times in 2007 starting from March. If that happens the bond market is some sort of a trouble but the biggest problem is in the economy, housing prices and the stock market.

the current state of the economy is interesting. Some say it is in life support system through the use of artificial liquidity. That liquidity is getting drained as Fed is getting more and more watchful on the inflation.

That is a real boom for the dollar. With shrinking trade and budget deficit, rising rates dollar looks most attractive here. It is almost like the opposite of a few years back when dollar started its massive downward journey. Dollar it seems from the technical chart is getting ready for the massive Bull Run. Markets always surprise people. Can Dollar rise to 1.10 per Euro? Only time will tell. The stochastic and probability indicators are real bullish on Dollar after a long time.

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