Tuesday August 9, 2005 - 05:42:35 GMT
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Tricom Futures and Foreign Exchange -
Forex: News Flash - The Fed Tightens by 25bps
The US dollar was softer against the euro and yen as traders await the Federal Open Market Committee's statement in the US tonight. Following the anticipated 25 basis points rate hike by the Federal Reserve, the market will focus on whether the FOMC statement provides evidence to how much higher US interest rates are likely to go
Dealers said this uncertainty weighed on the US dollar in overnight trading during which the euro reached a high of 1.2389.
While some punters are calling a 50bps hike today, I think the recent strength of Crude Oil will have the same effect as a 25bps tightening. Given we are coming into the winter months in the US, and the peak demand time of the year, we can expect consumers to tighten up the purse strings ahead of further rises in Crude prices.
I'm looking for a 25bps tightening today, followed by a statement suggesting further measured hikes. We'll see the USD trade higher initially, before the EUR/USD resumes its recovery. Look to pick-up the EUR around 1.2310-1.2280, with stops under 1.2230.
Today’s Economic Releases:
UK: Trade Balance
Today’s Top Trades
· Buy EUR/USD around 1.2300, with a stop below 1.2230
For more ideas send me an email, [email protected]
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