Euro Pounds Brief Wednesday 31st January 2007

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Wednesday 31/01/2007

• Today is a very big day for announcements. Among the critical stimuli of the day are the conclusion of the FOMC's policy deliberations,
• The FX market lightened positions Tuesday with upcoming Federal Reserve decision and key U.S. data releases out later in the week
• 22 primary dealers show end of year Fed fund rates ranging from 3.50%-3.75% to 5.75%-6.0% evenly split between modest rate cuts or modest rate hikes.
• US GDP is forecast to rise at an annual rate close to 3% in Q4

US Dollar:

• Weak U.S. economic data would shift interest rate hopes back toward Fed cuts and likely cause the
dollar to again fall. currency strategist at UBS in Stamford, CT.
• For the dollar to go up, we would have to see the market pricing in the possibility of a Fed hike -- for
the dollar to go down, we would have to price in Fed easing," he explained.
• A WSJ article suggesting today's GDP numbers could be reported lower than expected as a result of
lower car and light truck production not picked up in Q3.

Pound:

• House price survey could point to MPC to keep rates steady for several months.
• UK Economic Growth Will Slow Down In 2007, According Roger Bootle (BBG)
Bootle, a former advisor to the UK Treasury on monetary policy said the economy will expand 2.2% in
2007, down from 2.7% growth in 2006.
• House Price Rises Slow Down As Rate Increases Take Hold (Times)

Euro:

• Muted German Inflation May Not Prevent The ECB From Raising Rates (WSJ)
• French ILO Unemployment Rate Falls To Lowest Level Since June 2001 In December (RTRS)**
• The French labor minister said unemployment stood at 8.6% in December vs . 8.7% exp. The ILO jobless
number fell 22k in December

General News: Data releases

08:55 GE Unemployment Change, sa Jan Prev -108 vs Exp
10:00 EA Unemployment Rate, sa Dec Prev 7.6 vs Exp 7.6
10:00 EA HICP flash estimate, y/y Jan Prev 1.9 vs Exp 2.1
10:00 EA Business Climate Indicator Jan Prev 1.6 vs Exp
10:00 EA Economic Sentiment Indicator Jan 110.1 vs Exp
10:00 EA Industrial Confidence Jan Prev 6 vs Exp 5
13:30 US GDP, q/q ar Q3 Prev 2.0 vs Exp 3.0
15:00 US Chicago PMI Jan Prev 51.6 vs Exp 52.0
15:00 US Construction Spending Dec Prev -0.2 vs Exp 0.0
19:15 US FOMC rate decision Jan Prev 5.25 vs Exp 5.25
Oil Slipped But Held Above $56.00 A Barrel

Interbank
Updated 1st February
GB POUNDS / US DOLLAR 1.9560
GB POUND / EURO 1.5108
EUR/USD 1.2946
GBP/JPY 2.3732
GBP/AUD 2.5364
GBP/NZD 2.8528
GBP/ZAR 14.2543
GBP/CHF 2.4545
GBP/CAD 2.3065
GBP/SGD 3.0049
GBP/THB 67.460
GBP/HKD 15.2703