Press Release Summary: Wall Street advanced sharply last week as investors interpreted minutes from the Federal Reserve\'s last meeting, as an indication that the central bank is going to keep cutting interest rates in order to boost the economy.
Press Release Body: The Dow Jones industrial average, and Standard & Poor\'s 500 index, reached new record highs. Leading the charge has been the high tech Nasdaq 100, with companies such as Google, Apple and RIM (Blackberry) powering to record levels. Many questioned Google\'s IPO price of $100 per share, but with a share price above $600, Google continues to grow at an astonishing pace says Michael Wright of Betonmarkets.com
The minutes from the Federal Open Market Committee\'s September 18th meeting revealed that Fed governors voted unanimously for a half-point cut. The minutes also showed that officials were concerned that weakness in the dollar, could lead to higher inflation. Balanced against this were fears that the summer\'s credit crisis could still pose a significant risk to economic growth. The market interpreted this as meaning that the Fed is willing to intervene with a rate cut. Many believe the likelihood of a second cut either in October or at the December meeting seems greater than before the minutes were released.
Furthermore, the president of The Federal Reserve Bank of St. Louis, William Poole said during a speech on Tuesday, that he believes the financial markets are \"still fragile\" from weakening credit conditions, but that they do appear to be stabilising. San Francisco Federal Reserve Bank President Janet Yellen, said in a speech, the central bank must focus on \"how financial market developments are likely to affect employment, output and inflation.\"
All this doesn\'t look good for the US dollar, which has lately suffered major losses against all major currencies. As of writing, the Canadian dollar is worth more then the USD, for the first time in more then 30 years. The Euro/USD is currently in consolidation mode after breaking the 1.40 barrier in August of this year, and Sterling is trading above two dollars to the pound.
This time a rate cut, if it comes, may not be as unexpected, and so might not create as volatile a move as it did after the last one. After the excitement of September, and with the next US rate cut potentially already priced in, it may be time for some consolidation on the currency markets. With the ECB widely expected to keep rates the same going into the New Year, the best point of attack may be the EURO/USD exchange rate, which has been consolidating over the past month.
With BetOnMarkets.com the average trader can take advantage of this possible situation with a \'barrier range\' bet, which compensates a trader, if a trade doesn\'t touch either of two predetermined levels for the duration of the bet. You are predicting that the market will remain within two higher and lower barrier levels.
A no touch on the EURO/USD with a 30-day term, and a 500 pip spread either side, yields around 10%.
2012
