The U.S. Dollar Set to Decline Further?

U.S.: more rate cuts ahead?

The Federal Reserve has 50/50 chance to cut rates again by 50-25 basis points during this week meeting, as the worst economic recession since 1982 is permeating various levels of the U.S. economy. November mild inflationary numbers support a new rate cut decision. The Producer Price Index slid in fact for the fourth straight month by 2.2% and it rose only 0.4% annually. While inflation is contracting, the job data continues at the contrary to deteriorate to the 26-year high. For the week ending December 6th, payrolls jumped to 573,000 (530,000 expected) from 515,000 registered the previous week. The more stable four weeks moving average is now at 540,000 from 526,000, the highest level since 1982. In effect, after the financial institutions, the credit crunch is hitting consumers and the negative trend should continue for next year as well. In November, retail sales fell 1.8% (-2% expected) from October’s -2.9%, mostly due to a reduction of car sales.


Angelo Airaghi is a Commodity Trading Advisor, registered with the National Futures Association and the Commodity Futures Trading Commission. He has been an active professional since 1990 working for major international financial companies. In the past 10 years, Angelo Airaghi has been an analyst and commentator for national and international media.