Forex Investment and Currency Trading

Jan 22: FOMC decided to lower its target for the federal funds rate 75 b.p.s in an unscheduled meeting.
Jan 28: Fed offers $30bn through its Term Auction Facility (TAF). There was reduced demand at the auction.
Feb 8: Fed announced that it will offer $30bln in 28-day credit through its TAF on 11th Feb.
Feb 22: Fed announced that it will offer $30bln through its TAF.
Mar 7: Fed decided to add $200bn in liquidity in combined TAF and OMO, $140bn more than previously planned. The Fed was clear about increasing operations if conditions warrant.
Mar 10: Fed announced that it would offer $50bln [...]

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The financial market environment over the last 9 months has been turbulent to say the least. We have seen this turbulence reflected across all corners led by credit but also in Equities, Commodities and FX. 
In the recent months the market focus has been particularly focused on the credit scenario, health of financial institutions, ability to raise capital etc. etc. 
This problem has been correctly seen to be primarily a problem for U.S. financial institutions with other pockets of stress overseas (U.K. and Europe in particular). 
One thing financial markets hate… actually 2 things they hate are uncertainty and inaction. We certainly have [...]

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1 – 3 Month Outlook: Looking for a bottom
The next 1-3 months are critical for USD as the intense challenges facing the US economy are coming to a head. The Federal Reserve, and its global central bank partners, might have done enough to avert a financial calamity, but it is no time to declare victory. Instead, the Fed has to quickly turn its attention back to the intense downside risks from the housing market on the broader US economy. In particular, the sharp decline in US home prices continues unabated, present a distinct downside risk to US household wealth, which [...]

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The USD hovers near record lows versus major currencies, with little prospect for near term improvement. While recent Fed actions may help to stabilize financial system concerns, there are increasing signs of US economic weakening. The Chicago Fed National Activity Index has fallen to levels normally associated with recession, and additional FOMC easing
is likely to push the USD index to new record lows during 2Q 2008.
Residual economic momentum and stubborn headline inflation suggest stable ECB policy through at least the next few months. Strong interest rate support has helped push the EUR TWI (BoE index) to within 1% of its October [...]

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