Forex Investment and Currency Trading

USDCAD held in the 1.0090/1.0110 range post FOMC and closing at 1.0100.  Still feels heavy but decent USD buyers at 1.0090 for now. Tomorrow we get Existing Home Sales, final GDP for Q1 and claims data and then on Friday is the PCE inflation data and Consumer Confidence.  Nothing in Canada.   With USD closing at the lows (aga EUR, AUD,GBP ) I have to think we’ll see more USDCAD weakness o/n and into tomorrow.

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The FOMC left the Fed Funds rate at 2.00%. The statement largely reflects the flurry of inflation
concerns raised by Fed officials following Chairman Bernanke’s comment that the Fed will “strong resists” the erosion of price expectations (June 9). BUT, although the statement reflects a hawkish undertone, it lacks an outright hawkish bias and seems to show reluctance on the part of the Fed to hike rates in the near-term. Key phrase: “Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased”.
June 25, 2008
The Federal Open Market Committee [...]

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USD traded within tight ranges during the Asian session before ECB rhetoric resulted in a sharp increase in volatility. Despite these sharp moves, EUR/USD and the DXY USD index remained net unchanged on the session. Overnight saw the release of NZ consumer confidence which drove the underperformance of NZD, South African CPI which resulted in a ZAR bid, and the UK June CBI distributive trades report which led to a GBP rally. Norges bank are set to announce rates this morning with RBC expecting a 25bp hike to 5.75%.
US rates are universally expected to be left on hold at 2% [...]

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It’s been a boring week, with investors anxiously waiting for today’s FOMC announcement.  The rate decision itself doesn’t matter - it’s a foregone conclusion that the Fed will keep rates steady at 2.00%.  But as we’ve recently been, we’ll be vigilant when analyzing the accompanying statement.  Market expects a few changes to the statement.  The structure and language should be almost identical, with perhaps a softening of the possibility of a deeper downturn and recognition of further increases in commodity prices.  Since the last meeting, unemployment has increased further and financial markets remain under pressure.  Though inflation expectations have increased, [...]

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