Monday, December 22, 2008

Brazil Central Bank Lowers Inflation and Economic Forcasts

The Brazilian Central Bank lowered its inflation forecasts as well as its economic outlook in a preclude to lowering interest rates in the near future. Although there has been extensive talk that Brazil was immune to the fall out from the credit crisis, in reality no one is. Rates in Brazil have been coming off as the currency has been getting beat up. This trend looks set to continue into the new year. I am looking for similar stories in Chile, Colombia and Argentina. Remember the Fed came out last week and said that they were going to keep interest rates at current levels (.25%) for an extended period of time. With the new year just weeks away Trader will be looking for a way to make money. Although I think that financial institutions will want only limited risk, some risk will need to be put on the table. Yield Monkey's get ready! I expect a gradual move into higher yielding currencies as economic activity grinds to a halt, volatility decreases and traders look for a way to make money. In these times yield is the way to go.

Good Luck and Good Currency Trading.



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