Forecast by Dr. Gil Feiler from Info Prod Research reveals bearish outlook to the USD against major currencies. According to his forecast, by the end of 2006 the 10 year government bond yield will decrease by about 10 percent or 50 basis point to 4.50 percent, compared to 5 percent on Wednesday morning. 30 year government bond yield will decrease at a slower pace, thus positive spread will be maintained and no inversion curve is forecasted by Feiler by the end of 2006. Nevertheless, a very slight inversion curve is seen in the 10 years – 2 years Government Bond Yield Spread.
Feiler forecasts that the Fed Funds Target Rate at the end of 2006 will hit 5 percent utmost, following another rate hike in the next meeting of the FOMC by the end of June 2006 to 5.25 percent, in order to fight the threat of rising inflation. Feiler estimates that there will be no further rate increases but decrease in the Fed rate in the end of 2006.
As to the USD, Dr. Feiler estimates that the Euro will continue to rise to over 1.30 USD (1.2634 Wedensday noon) by the end of 2006. According to Feiler's estimation, the GBP will rise to 1.88 (1.8476 Wednesday noon), Japanese Yen per USD will strengthen to 110 JPY to USD (114.92 Wednesday noon).
