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Central Banks: Fed

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Jun 25 Meeting: On hold at 2%

Thu, Jun 26 2008, 14:47 GMT
by Marina Schiaffino

FXstreet.com


FedThe Federal Reserve's Monetary Policy Committee has decided to leave its Fund Rate unchanged at 2%, as widely expected, after their monthly monetary policy meeting.

The Fed affirms that easing of monetary policy plus measures to support market liquidity should promote economic growth. Downside risks to growth, although still present have diminished somewhat, while upside risks to inflation have increased, the Bank reaffirms its commitment to "monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability."

Check the effect that the meeting has over the pairs in our Rates and Charts Section or compare the movements of the different banks in our World Interest Rates Table. Find out what our experts: Valeria Bednarik and Rob Booker have to say about this meeting.

In-Depth Analysis: Fundamental

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Analysts' comments

  • · George Davis, chief foreign exchange technical analyst at RBC Capital Markets
    "We saw the dollar come under some very aggressive selling pressure after the (U.S. Federal Open Market Committee) decision yesterday." - Reuters
  • Michael Woolfolk, economist at Bank of New York
    "The dollar is on the ropes and has further to fall unless the Fed can correct the market perception that U.S. rates are on hold indefinitely (...) With the ECB clearly focused on inflation and willing to sacrifice growth to keep it at bay, the euro is likely to break its all-time record above $1.60 in the near term." - Reuters
  • Donald Kohn, Federal Reserve vice chairman
    "We are still in the midst of the current episode. Financial markets remain stressed; housing markets in many countries are adjusting after a sharp run-up in prices; and the effects of the turmoil on economic activity in the United States and elsewhere are still working themselves out. Accordingly, it is too early to tell how correlated U.S. and foreign activity will have been in this period. It is far from clear that the divergences in performance we have seen of late, which are tentative in any event, represent distinct breaks from historical benchmarks." - Thomson Financial News

Published on  Thu, Jun 26 2008, 14:47 GMT

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Preview of Jun 25 Meeting

Wed, Jun 25 2008, 12:34 GMT
by Marina Schiaffino

FXstreet.com


FedThe US Federal reserve will announce this night its monetary policy decision, which, by most accounts will be to keep its key interest rate unchanged at 2%, while the experts advise to pay attention to the Fed’s language for hints of future rate hikes in the second half of the current year.

US economy is showing a persistent weakness despite consecutive rate cuts since August which has lowered the main interest rate from 5.25, while the credit crisis has not faded yet. Furthermore fast growing paces of energy and food prices do add reasons for concern to the monetary policy committee.

Market analysts point out to the Fed’s statement as the highlight of the monetary policy decision to assess the Fed’s general lines for the future monetary policy, the general consensus advances a somewhat neutral stance, although voices are for a rate hike in September 2009.

Check the effect that the meeting has over the pairs in our Rates and Charts Section or compare the movements of the different banks in our World Interest Rates Table.

In-Depth Analysis: Fundamental

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Analysts Comments

  • · Boris Schlossberg, senior currency strategist at FXCM
    "A non-committal statement from the Fed would likely generate only more dollar weakness. With ECB seemingly dead set on raising rates at it's next meeting in July, inaction from the Fed would create further expansion of interest rate differentials between the euro and the buck. Ironically enough a neutral stance by the Fed would not necessarily cause dollar losses against the yen as equities could stage a relief rally." - Reuters
  • · Michael Metcalfe, senior strategist at State Street
    "There is very little probability of a (Fed) hike this time. There is an outside chance that they could signal that there might be a higher probability of a move in August but it doesn't seem to me at the moment that the economy is strong enough to justify that." - Reuters
  • · Stephen Halmarick, director and strategist at Citigroup
    "If the Fed downplays tightening expectations, we'd expect the US dollar to soften." - SMH
  • · Marc Ostwald, strategist at Insinger de Beaufort
    "For this meeting at least, there is scope for the Fed to present a balanced view of the risks to growth and inflation, despite Bernanke's recent change of tune. A more aggressive wording on inflation would have to be accompanied by some form of suggestion that while the downside risks to growth may have ebbed, they are still considerable." - Thomson Financial News

Published on  Wed, Jun 25 2008, 12:34 GMT

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Preview of Apr 30 Meeting

Tue, Apr 29 2008, 09:48 GMT
by Marina Schiaffino

FXstreet.com



FedThe Federal Reserve will probably announce a 25 basis points rate cut on Wednesday to 2%, completing the seventh rate cut since august last year, pointing out to remaining concerns over the US slowdown.

Although for some experts there is still a possibility of a surprising decision, the fear of entering a recession later this year.

Check the effect that the meeting has over the pairs in our Rates and Charts Section or compare the movements of the different banks in our World Interest Rates Table.

In-Depth Analysis: Fundamental

In-Depth Analysis: Technical

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Analysts Comments

  • · Peter Rosentreich, chief market analyst at ACM:
    "Just hours before the FOMC announcement provisional estimates for Q1 GDP will be released. There are risks of a sharp rebound due to contribution from inventories, however slowing consumer spending, weak consumer confidence and declining job figures have us leaning to the weak side. As an intraday play we believe the GDP figures could be the real market mover. Should the figure surprise and point to the upside we should see a strong Usd rally before the Fed's meeting." - ACM
  • · Hans Nilsson, FX strategist at CMS Forex:
    "The dollar rose against most major currencies in NY trading Tuesday on speculation the Federal Reserve will signal a pause in lowering interest rates at FOMC rate decision meeting, and on increased concerns the US economic slowdown is spreading to other countries." - CMS Forex

Published on  Tue, Apr 29 2008, 09:48 GMT

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Mar 18 Meeting: 75bp rate cut

Wed, Mar 19 2008, 08:58 GMT
by Marina Schiaffino

FXstreet.com


FedIn its March 18 meeting the Fed has decided to cut its interest rate by 75bp, leaving the benchmark rate at 2.25%. Though analysts widely agree that the Fed would cut the rate, this reduction a bit lower of what many forecasted.

The decision gave some support to the greenback. Though the biggest rally came from the equities.

Check the effect that the meeting has over the pairs in our Rates and Charts Section or compare the movements of the different banks in our World Interest Rates Table.

In-Depth Analysis: Fundamental

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In-Depth Analysis: Related Markets

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Analysts' comments

  • · Kathy Lien, chief strategist at FXCM:
    "While the Fed's smaller-than-expected move may have prevented another sharp drop in the dollar, interest-rate futures market are still pricing in further rate cuts and the dollar is set to come under renewed pressure." - Thomson Financial News
  • · T.J. Marta, senior currency strategist at RBC Capital Markets:
    "Though the 75 basis points interest-rate cut was less than what many in the financial markets expected, the Federal Reserve stands ready to do more." - Thomson Financial News
  • · Yosuke Hosokawa, forex dealer at Chuo Mitsui Trust & Banking:
    "Worries about the US economy continued to drag on the dollar after the Fed said in the statement accompanying its rate decision that recent information indicates that the outlook for economic activity has weakened further and that uncertainty about the inflation outlook has increased." - Thomson Financial News

Published on  Wed, Mar 19 2008, 08:58 GMT

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Preview of Mar 18 Meeting

Tue, Mar 18 2008, 08:23 GMT
by Marina Schiaffino

FXstreet.com


FedThe economic overview in the US markets is quite turbulent. On one hand there's an economic recession that may be imminent, while on the other we can see the emergency Fed rate cut done on the weekend. These data may lead to a 100bp interest rate cut to 2.00%, the biggest cut since 1984.

As many analysts are expecting this 1% rate cut, it's very possible that the FOMC follows their desires and changes the initial expectations of 75bp.

Check the effect that this sudden cut has over the pairs in our Rates and Charts Section or compare the movements of the different banks in our World Interest Rates Table.

In-Depth Analysis: Fundamental

In-Depth Analysis: Technical

In-Depth Analysis: Related Markets

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Analysts Comments

  • · Ashraf Laidi, chief currency analyst at CMC Markets:
    "Our expectations lean towards a 100 bp cut in the Fed funds rate to 2.00 pct, bringing the short-term rate well below the level of inflation." - Thomson Financial News
  • · Peter Boockvar, equity strategist at Miller Tabak & Co:
    "This is not the kind of help you want to see. Bear Stearns getting sold at $2 is alarming. When you see the Fed relying on tools that haven't been used since the Depression, it's alarming." - BBC News
  • · Charles Davis, economist at the Center for Economic and Business Research:
    "Today's data decreases further the likelihood of ECB rate cuts in the near term, whilst the Fed is highly likely to enact a further 75 basis-point cut when it meets on Tuesday. The appreciation of the euro has been catching the headlines recently -- today's data are likely to see the euro strengthen again." - MarketWatch

Published on  Tue, Mar 18 2008, 08:23 GMT

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Jan 30 Meeting: 50bp rate cut

Thu, Jan 31 2008, 08:46 GMT
by Marina Schiaffino

FXstreet.com


FedIn its January 31 meeting the Fed has decided to cut its interest rate by 50bp, leaving the benchmark rate at 3%. The Central Bank also lowered the discount rate to 3%. Though analysts widely agree that the Fed would cut the rate, this reduction was not exactly what many forecasted.

The decision did help accelerate the EUR/USD at the first moment, arriving to a peak of 1.4910, while now it is trading around 1.4860.

Check the effect that the meeting has over the pairs in our Rates and Charts Section or compare the movements of the different banks in our World Interest Rates Table.

In-Depth Analysis: Fundamental

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In-Depth Analysis: Related Markets

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Analysts' comments

  • · Joseph Brusuelas, chief economist at IDEAglobal:
    "The Fed signaled to the market that it realizes the severity of the problems in the financial system and the prospects for growth. There was no waffling. The Fed didn't try to have it both ways. More rates cuts were clearly signaled." - Dow Jones
  • · John Noonan, economist at Thomson IFR Markets:
    "The dovish FOMC (Federal Open Market Committee) statement pushed short-term US yields lower and the Fed funds futures are now pricing in a 100 percent chance of a 25 basis points ease at the March 18 meeting and a 52 percent chance of a 50 basis point cut at that meeting." - Thomson Financial News
  • · Michael Woolfolk, economist at Bank of New York:
    "The market was not entirely convinced the Fed would move by 50 basis points. If inflation continues to rise, the Fed has a problem on its hands." - Thomson Financial News

Published on  Thu, Jan 31 2008, 08:46 GMT

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Preview of Jan 30 Meeting

Mon, Jan 28 2008, 10:30 GMT
by Marina Schiaffino

FXstreet.com


FedAfter the emergency 75bp rate cut to 3.5% that the Fed applied last week, traders are awaiting what will the bank do on its Jan 30 meeting. Many analysts state that the Fed will low for another 25bp or 50bp its Benchmark rate, fuelled by the fears of recession that still gliding the US markets.

Check the effect that this sudden cut has over the pairs in our Rates and Charts Section or compare the movements of the different banks in our World Interest Rates Table.

In-Depth Analysis: Fundamental

In-Depth Analysis: Technical

In-Depth Analysis: Related Markets

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Analysts Comments

  • · Thomas Lam, treasury economist at United Overseas Bank:
    "It's almost a sure thing that the Fed will lower interest rates today. The magnitude of the rate cut, whether it will be 25 or 50 basis points, is still being debated by the market." − Thomson Financial News
  • · James Hughes, market analyst at CMC Markets:
    "A 50 basis point cut is now almost looking inevitable. That may lead to "an expectation that enough has been done to stave off recession." − AP
  • · Mic Mills, trader at TradIndex.com:
    "This is all about dollar weakness. Everyone is confident that the Fed is going to cut rates." - Thomson Financial News
  • · Peter Chatwell, fixed income strategist at Calyon:
    "Aside from the uncertainty surrounding the rate decision, some believe the Fed may try to temper aggressive market expectations for future rate cuts over the coming months in its accompanying statement." - Thomson Financial News

Published on  Mon, Jan 28 2008, 10:30 GMT

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Emergency 75bp rate cut

Wed, Jan 23 2008, 08:16 GMT
by Marina Schiaffino

FXstreet.com


FedOnly seen before after 9/11, the Fed takes a huge step in lowering interest rates and cuts 75bp in an emergency move, lowering its interest rate to 3.5%. GBP, EUR, CHF soar on the news, but again, all pairs, after reaching extreme levels, have retraced big time in a very good technical move. More information at the Advisor Blog.

Check the effect that this sudden cut has over the pairs in our Rates and Charts Section or compare the movements of the different banks in our World Interest Rates Table.

In-Depth Analysis: Fundamental

In-Depth Analysis: Technical

In-Depth Analysis: Related Markets

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Analysts Comments

  • · Joshua Shapiro, chief economist at MFR:
    "Lets face it, cutting by 0.75 pct today rather than in eight days at the regularly scheduled FOMC meeting is meaningless in terms of the fundamental economic outlook. While a deteriorating economy obviously argued for easing at the upcoming meeting (0.50 pct or 0.75 pct was viewed as a done-deal by markets), there can be no doubt that the timing of this mornings move is aimed at supporting global financial markets after yesterdays global equity meltdown." - Thomson Financial News
  • · Divyang Shah, global strategist at IDEAglobal.com:
    "A 50 basis point cut is now a real risk at next week's meeting although if equity markets are a little calmer then maybe they can get away with doing 25 bps. The Fed will be cognisant of not disappointing financial markets so market pricing will be important." - Thomson Financial News
  • · Derek Halpenny, senior currency economist at The Bank of Tokyo-Mitsubishi:
    "The implications for the dollar are slightly complicated. Risk aversion has in recent days come to the aid of the dollar ... however, further aggressive monetary easing will substantially erode any yield support for the dollar and hence we suspect the current risk aversion support for the dollar will give way to the negative yield developments that are now more apparent after this inter-meeting cut." - Thomson Financial News

Published on  Wed, Jan 23 2008, 08:16 GMT

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Dec 11 Meeting: 25bp rate cut

Wed, Dec 12 2007, 10:46 GMT
by Marina Schiaffino

FXstreet.com


FedIn its December 11 meeting the Fed has decided to cut its interest rate by 25bp, leaving the benchmark rate at 4.25%. The Central Bank also lowered the discount rate by 25bp to 4.75%. This reduction has disappointed the expectations of many analysts that the Fed would adopt some alternative policy measures in order to solve the credit crunch crisis.

This reaction was Dollar-friendly at the beginning, but at the open of the European session the trend has changed, turning into a negative influence for the USD. Analysts do not have faith in the USD, and they have used the initial rally to reverse positions, as they still see conditions deteriorating further in the US.

Check the effect that the meeting has over the pairs in our Rates and Charts Section or compare the movements of the different banks in our World Interest Rates Table.

In-Depth Analysis: Fundamental

In-Depth Analysis: Technical

In-Depth Analysis: Related Markets

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Analysts' comments

  • · John Derrick, director of research at U.S. Global Investors:
    "The Fed needed to cut more now in order to fend off the credit crisis that has intensified in the past month." - CNNMoney.com
  • · Martin Slaney, analyst at GFT Global Markets:
    "Hopes that the Fed will shortly announce a new liquidity support program are...tempting some buyers back in." - MarketWatch
  • · Douglas Porter, deputy chief economist at BMO Capital Markets:
    "Obviously, the market has given (the Fed's cut) the heavy-duty thumbs down. It seems that this was a relatively miserly move, more or less the bare minimum that was expected." - Financial Post

Published on  Wed, Dec 12 2007, 10:46 GMT

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Dec 11 Meeting Preview

Mon, Dec 10 2007, 08:04 GMT
by Marina Schiaffino

FXstreet.com


FedThe upcoming FOMC meeting is about to be one of the most important in the last months. All of the economists are eagerly awaiting the decision of the Fed, forecasting that there will be at least a 25bp rate cut. Some of the more daring analyst even expect a 50bp cut.

With all the liquidity problems after the credit crunch crisis, the Dollar has taken quite a hit already, but this decision could leave it worse. The 25bp cut is priced-in, but a 50bp lowering would probably cause a fall in the USD.

Check the effect that the minutes are having over the pairs in our Rates and Charts Section or compare the movements of the different banks in our World Interest Rates Table.

In-Depth Analysis

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Analysts' comments

  • · Cornelius Luca, economist at Global Forex Trading Ltd:
    "The dollar slipped versus the euro and the pound but made little progress versus the pound and the yen on Monday, as the market consolidated before the expected Fed rate 25-basis point cut today. Only a 50-bp cut would likely hurt the dollar. Otherwise, choppy trading should rule." - Global Forex Trading Ltd
  • · Asha Bangalore, economist at Northern Trust:
    "The FOMC is widely expected to lower the federal funds rate on December 11. The market is fully priced in a 25 basis point cut, while there is meaningful probability for a 50 basis point cut in place. We are predicting a 25 basis point cut in the federal funds rate and a 50 basis point reduction in the discount rate." - Northern Trust
  • · Mitul Kotecha, head of global foreign exchange research at Calyon:
    "The dollar could benefit if the Fed does deliver a 25 basis point cut given the more dovish expectation priced into the futures market." - Thomson Financial News

Published on  Mon, Dec 10 2007, 08:04 GMT

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31st October Meeting Review

Thu, Nov 1 2007, 10:15 GMT
by Marina Schiaffino

FXstreet.com


FedFor the second time in as many meetings, the Federal Reserve cut a key interest rate to ensure against a possible slowdown in the economy. The Fed's policymaking Federal Open Market Committee lowered its most important federal funds rate target to 4.5 pct. "Economic expansion will likely slow in the near−term," the FOMC said in a written statement accompanying the decision.

Check the effect that the minutes are having over the pairs in our Rates and Charts Section or compare the movements of the different banks in our World Interest Rates Table.

In-Depth Analysis

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Analysts' comments

  • · Senior currency strategist at the Bank of New York:
    "The stock market is going to think very highly of this (rate cut), but it will continue to undermine the dollar." - AP
  • · Ashraf Laidi, chief currency analyst at CMC Markets U.S.:
    "Currency traders are not buying into the relative hawkishness cropping up in this month's statement. While the outlook for the Fed is between further rate cuts and no rate cuts ... rates will remain unchanged if not go up for foreign banks." - Thomson Financial News

Published on  Thu, Nov 1 2007, 10:15 GMT

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31st October Meeting Preview

Tue, Oct 30 2007, 08:52 GMT
by Marina Schiaffino

FXstreet.com


FedThere has been a lot of talk about Fed's probable decision. Many analysts assure they will cut 25bp their interes rate and pass from the actual 4.75% to 4.50%.

Over the short term, the impact on the Dollar will be mainly guided by both the anticipated (or not) Fed move and the statement that will follow, indicating if that is enough or that there are more cuts needed.

Check the effect that the minutes are having over the pairs in our Rates and Charts Section or compare the movements of the different banks in our World Interest Rates Table.

In-Depth Analysis