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by Ashraf Laidi
Posted: Sep 12, 2008 17:10
Comments: 4
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Fed Forced Back to Easing Mode

Today's unexpected declines in US retail sales and PPI coupled with the worsening state of conditions with US banks make interest rate cuts a foregone conclusion in Q4, supporting my calls since May that the next interest rate change is down, rather than up.
Ashraf Laidi
London, UK
Posts: 0
15 years ago
Sep 13, 2008 23:12
Hi Tan, rate cut tuesday is more of a major development than a "surprise". Not a big "surprise" because AFTER FRIDAY's RETAIL SALES, Fed funds futures were already pricing as much as a 30% chance of a Fed cut as early as MONDAY or TUESDAY. If a new announcement regarding Lehman comes out on Sunday or Monday, then that might help markets a bit, (drag down on yen) which may reduce need for easing. That could win the Fed some time, but in my view, the most LIKELY SCENARIOS:

1) 50 bps cut in DISCOUNT RATE CUT this week; OR,

2) 50 bps FED FUNDS cut between September and October meetings.

Stay tuned.
United States
Posted Anonymously
15 years ago
Sep 13, 2008 6:19
Fed cut rates Tuesday, everybody thinks rate unchange. A rate cut Tuesday will be a BIG surprise, dont you think?

USD/JPY can target 105 by end of September? Your thoughts and insight pls. Thks.

I like your new websight. Any video seminar coming, like CMC? CMC closing down, what a misfortuntune.
Ashraf Laidi
London, UK
Posts: 0
15 years ago
Sep 13, 2008 2:38
Hi Hamish, the retail sales and PPI numbers were behind the intensification of the dollar decline. Have a look at the Intraday Thoughts right after the news. I mentioned in Wednesday's seminar that the Fed's next move is a rate cut and I sent CMC clients the chart showing a major trend line support in EURUSD at 1.3845. Here's what we said: "The chart below shows interim support stands at $1.3844, which is the 50% retracement of the rise from the 2006 low to the $1.6030 high. This level could also coincide with the $100 barrel mark in oil prices".

GBPUSD unlikely to follow above $1.80 which is HEAD in the Head&Shoulders (see chart sent on Monday).
JPY may come under pressure if Fed cuts rates this week, but overall, USDJPY unlikley to break above 108.50. 105 remains target.

Vancouver, Canada
Posted Anonymously
15 years ago
Sep 12, 2008 22:25
"a partial unwinding" you say!!! Whew! did I get it wrong? what a wake up call.
I am still unsure why usd took such a big hit & as for the gbp & jpy I haven't a clue what happens next.

Ashraf, you have a fabulous website, I hope I can absorb it all & profit by it.

Best wishes.............Hamish