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Market Session Recaps

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New York Session

Wed, Apr 30 2008, 23:10 GMT
by Forex.com Research Desk

FOREX.com

The USD fell off its perch today as the Fed voted to cut rates by an additional 25 bps to 2.00%, and signaled that additional rate cuts would be made as needed, largely fulfilling the markets expectation of a 'one and done' move from the Fed.  However, the Fed's economic assessment pointed to ongoing US weakness, noting that economic activity remains ''weak'' and that labor markets have ''softened further.''  The overriding impression is that the US downturn will be longer and deeper than many had expected.

Earlier in the day, though, US data offered a glimmer of hope that such would not be the case.  1Q advance GDP indicated the US economy expanded 0.6%, better than the forecast 0.5% increase and avoiding a negative reading.  The April ADP national employment report also surprised with a +10K addition to jobs, far better than the expected -60K, but this report has been off-base recently relative to the government's NFP report, due out on Friday.  Even the Chicago purchasing managers' report surprised with an improvement in the headline reading, rising from 48.2 to 48.3 in contrast to expectations of a drop to 47.5.  Still, the underlying details of the Chicago PMI were weaker, with the employment index dropping nearly 10 points along with smaller drops in new orders and order backlog indexes, suggesting the overall outlook remains weak.

The USD traded in relatively narrow ranges prior to the FOMC announcement in the afternoon, with EUR/USD trading between 1.5530-70 and USD/JPY holding between 104.20-70.  The greenback initially rallied after the Fed signaled a likely pause in further interest rate reductions, with USD/JPY rising to 104.80 and EUR/USD dropping to around 1.5530.  But the bleak reality eventually set in and the USD reversed course, with USD/JPY dropping back to 103.80 and EUR/USD gaining to a higher over 1.5640 before falling back to close around 1.5620.  US stocks also initially rallied further post-FOMC, but could not sustain fresh gains and ended up losing ground on the day, with the S&P 500 finishing nearly -0.4% lower.

Upcoming Economic Data Releases (Asia Session)

• 4/30  23:01  UK  Bank of England to release Financial Stability Report   
• 4/30  23:30  AU  AiG Performance of Mfg Index  APR                       51.2  - -
• 5/1  0:15  NZ  Bollard Speaks at Trans-Tasman Business Circle Lunch   
• 5/1  1:30  JN  Labor Cash Earnings YoY  MAR                                1.30%  1.20%
• 5/1  1:30  AU  Building Approvals (MoM)  MAR                                0.10%  -0.50%
• 5/1  1:30  AU  Building Approvals (YoY)  MAR                                  -1.60%  - -
• 5/1  6:30  AU  RBA Commodity Index SDR YoY%  APR                    9.50%  - -

Published on  Wed, Apr 30 2008, 23:12 GMT