Spanish and French Interest Rates to Fall by 1 percent?

Euro Exchange Rate Outlook : The IFO Nov index of the business climate fell more than forecast to 85.8 from 90.2 in Oct, the lowest in nearly 16 years (Feb 1993). The “current assessment” fell to 94.8 from 99.9 in Oct, while "business expectations" fell to 77.6 from 81.4 in Oct. IFO’s Nerb said he doesn’t expect a rapid increase in unemployment, although there will be some, and he expects the ECB to interest cut rates by 100 bp.

In economic data, eurozone new industrial orders for Sept fell 3.9% m/m and 1.1% y/y.

On Friday, the flash estimate of manufacturing PMI fell to 36.2 in November from 41.1 in Oct and an estimate of 40.5. Today Bini-Smaghi said the eurozone was holding up pretty well and the new euro exchange rates level was pretty good for exports.

We don’t quite know what to make of such remarks.

Barbara Rockefeller
Foreign Exchange Trading
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