US Dollar Tumbles Ahead of FOMC Meeting

The New York Fed’s Empire State general business conditions index fell to -22.23 in March from -11.72 in February. Market players had expected an improvement in March to -8.00. This reading was the lowest since the index was launched in July 2001. The report said, “The Empire State Manufacturing Survey indicates that conditions for New York manufacturers deteriorated further in March.” Another economic release that points to possible recession in the US is the industrial production. Total US industrial output fell 0.5% in February, worse than the 0.1% decline expected, and a deterioration from the 0.1% gain in January. This decline was the biggest drop in monthly output since a 0.6% drop last October.

IMF: No Need For Currency Intervention

IMF Managing Director Dominique Strauss-Kahn said Monday “we are in a more tense situation” in the forex markets. He said, “It doesn’t appear that in this situation central banks need to intervene. But even if I thought they should, it’s not up to the IMF director to make a public declaration.”

Forex Trading

The US dollar fell against the Euro, Swiss franc and Japanese yen after the Fed cut the rate on loans to banks and became a lender to securities firms. EUR/USD reduced some of its earlier gains after rising to an all-time high of 1.5910 amid unconfirmed reports suggesting that ECB officials are planning to express concern about the Euro’s recent strength. As for USD/CHF, it has bounced back up to 0.9800s after falling a massive 360 pips Monday to an all-time low of 0.9610. The US dollar could stabilise till the US FOMC meeting on Tuesday. A 100-bp cut won’t be good for the greenback.

Tuesday:

Reserve Bank of Australia publishes board minutes 0030 GMT

Swiss industrial production 0715 GMT

UK retail price index, CPI 0930 GMT

Canada CPI 1100 GMT

US PPI, housing starts 1230 GMT

US FOMC rate decision 1815 GMT

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Comment by David

2008-03-17 16:32:12

too bad the moves were over by the time the US markets opened..

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Comment by winner

2008-03-17 17:57:42

1.6000 should be next for eur/usd

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