• USD: Mixed, IMF says the recession is not yet over, Fed awaited
  • JPY: Lower, pressured by selling in cross trade to be GBP and EUR, threat of rising US bond yields
  • EUR: Lower, Weber says ECB will maintain special policy measures for sometime
  • GBP: Higher, BOE voted unanimously to hold the current level of bond purchases, no remuneration rate cut
  • CAD and AUD: AUD & CAD lower, BOC officials express concern about CAD strength

Overview

USD edged higher ahead of today's FOMC meeting supported by profit taking and a modest drop in risk appetite as the IMF says that the global recession is not yet over. IMF official’s said that the impact of the recession will be felt for a long time after it's technically over. USD traded at a new low for 2009 Tuesday supported by optimism about the global recovery and improving risk appetite as US equity markets closed at a new high for 2009 and Asian equities closed at 13 month high. GBP rallied supported by the release of the BOE policy minutes for the September policy meeting which showed that the BOE policy board voted unanimously to hold interest-rate policy steady and maintain the current level of bond purchases. In August the BOE policy board was split with some members including BOE Governor King calling for an additional expansion of bond purchases. There was limited reaction to report that EU manufacturing and services PMI posted modest improvement last month. ECB’s Weber said that the ECB will likely maintain unconventional monetary policy measures for sometime to come. CAD drifted lower as BOC officials expressed concern about CAD strength and Canada's Finance Minister Flaherty warns that the Canadian recovery is fragile with most of the growth tied to stimulus. The trade awaits the FOMC policy decision at 215 ET. The Fed is expected to note the improvement in the US economy, confirm that interest rates will stay low for an extended period and the Fed the may hint at possible timeframe for exit from quantitative ease. USD remains vulnerable to improving optimism about the global recovery and speculation that G-20 effort to try and correct global imbalances may require further weakening of the USD. The G-20 meeting will be held on September 24th and 25th.

Today’s US data:

No major US economic data was released in today's trade.

Upcoming US data:

On September 24th initial jobless claims for week of 9/19 will be released expected at 540k compared to 545k last month. On September 24th August existing home sales will be released expected at 5300k compared to 5240k last month. On September 25th August durable goods will be released expected at 1.1% compared to 5.1% last month along with final University of Michigan sentiment for expected unchanged at 70.2%. August new home sales will also be released on September 25th expected 450k compared to 433k last month.