Greg Gibbs Rate Quotations

Rate speculation this week has built up a head of steam. This will support the Australian dollar.

Interest rate expectations will continue to support the Australian dollar.

Against that, the market has started thinking about rate hikes in Europe in the first quarter of next year. That is going to prevent a large fall in the euro.

The currency and rate futures markets are pricing in a rate hike by year-end and two by the middle of next year and this is why the euro has strengthened, especially against the yen.

The market is currently factoring in rate hikes toward the end of the year of as much as 50 basis points. That's about right, considering the kind of strong economic numbers we have got out of Japan.