Monday November 14, 2005 - 09:38:21 GMT
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CMC Markets - www.cmcmarkets.com
Currency markets poised for slow start to the week, solid direction likely tomorrow.
November 14th - The economic calendar is set to start he week in a somewhat quiet mood and this may make meaningful direction difficult to come by in the currency markets, although any such sentiments are likely to be short lived. UK inflation, US PPI and the German ZEW survey are all due for release tomorrow and each holds the potential to have a direct influence on respective monetary policy. After a recent spike in producer prices in the US – spurred on largely by higher oil prices – traders will be looking for a sharp reversion. News such as this would start to ease arguments of runaway inflation and could pave the way for the FOMC to break the cycle of higher interest rates at some point in the New Year. Equally, the UK figure will come under scrutiny after last month’s test of the upper limit as set by the Bank of England at 2.5%. A move above this line – although seen as unlikely - would really see pressure being put on the MPC to hike rates back to 4.75%, although there remains a concern that the UK economy will start to slow into 2006. Furthermore, in Europe, speculation is building – and this is certainly being reflected in the futures market - that the ECB will finally hike rates at next month’s meeting. Data released in recent weeks is certainly supporting this so although the wee may be on for a slow start, expect momentum to build quickly.
Wayne Roworth and Enis Mehmet
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