Fed rate cut may be less than expected with signs of inflation worries – a bullish fundamental for US Dollar
Tania Sailor
Mar. 18, 2008

The market will get a shock of the day as Fed will cut rate less than expected by the market and may signal that these rate cuts are in the process of ending.

The rate cut may start in Europe and other countries. The rate increase in Japan is now history with weaker economy in Japan.

The relative interest rate differential between the United States and the other countries may reverse this year. The US deficit spending may have seen a peak. As oil price falls below $60 a barrel due to lack of worldwide demand, the US trade deficit will improve dramatically.

The scenario is bullish for US Dollar on a long-term basis. US economy may actually avoid a negative growth for more than one quarter. The Fed is now more concerned about inflation.

According to recent S&P report, the subprime crisis is in the process of ending. The light is finally there at the end of the tunnel.

The after effects of financial meltdowns triggered by mortgage defaults and implosion in home prices, still rattle the US Dollar index. But in the next twelve months, US dollar can actually appreciate by 40%. That will take US Dollar index to 98 from 72.

Fed rate cut may be less than expected with signs of inflation worries – a bullish fundamental for US Dollar
Tania Sailor
The market will get a shock of the day as Fed will cut rate less than expected by the market and may signal that these rate cuts are in the process of ending.

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