Weekly Outlook: Inflation vs. Credit strains

G-8 summit, exploring the possible impact:
Soaring food and energy prices was a common concerns this weekend, both in G-8 Finance Ministers summit in Osaka and World Economic Forum on East Asia in Kuala Lumpur.

As it was expected, the officials expressed their concerns on a weak dollar as an inflating factor. Although such views are usually dollar-positive, but there was some remarks, especially from the US Treasury Secretary Henry Paulson, which could limit any real effect on the dollar. He said: (based on Bloomberg reports)

• "…surging oil costs may postpone a rebound in the American economy, which still faces ``challenges'' from the housing slump and credit crunch".
  Showing different view on the link between dollar and oil price, he said: "All evidence points to differences between supply and demand as the main reason for commodity price gains"
• It is also important to note that there was no official statement on the dollar or any other currency.

OPEC and Customers in Jeddah:
It is said that the Saudi Arabia might announce an increase in oil production, but I am not sure whether it could affect oil price or not. If the answer is yes I expect to see its full effect on Monday.

Quarterly reports from the Financials:
Lehman, Goldman and Morgan Stanley are to report this week. Considering recent disappointing results, I think it could just revive concerns on credit strains, favoring people who don't expect the Fed to raise interest rate soon.