10/31/2005

When comparing the implied future Eurodollar Interest rates vs. the implied future Euribor Interest Rates,

we get a very interesting picture: The short term interest Rate differential is expected to increase to

2.2 percentage points in the February of 2006.  After that point, the rate of interest rate increases by the

European Central Bank is expected to surpass the "speed" of increases by the FED.

This outlook is very positive for the US Dollar in the short term (next 2-3 months), as the Dollar is trying

to go against the 1.19 Euro support level. Obviously, there is a number of other factors which influence the

Dollar vs. Euro exchange rate, such as US Current Account Deficit and US Trade Deficit.

This is not a trade recommendation and no one should treat it as such.