Trading was frantic yesterday as the market braced itself for the Fed rate decision due out this afternoon. US equities surged late in the day to their second largest daily increase ever, and equities remained bullish across the globe. Headaches at the Japanese Central bank may be easing as the Yen retreated amid the mayhem.   Risk appetite seems to be returning to the markets which have eroded some of Yen’s recent strength. The Bank of Japan will be grateful for this, as reports were emerging that they were considering slashing rates at their next meeting.  The Nikkei’s surged as a result of this, gaining more than 10% over the week thus far.

The FTSE was also in the green and Sterling managed some gains on the back of this. It is yet to be seen whether this is simply a rest in between rounds after the recent pummelling the pound has received. Yesterday it was given a helping hand in the dollar pairing, as US data showed that Consumer Confidence plunged to a record low reading 38.0, missing consensus estimates of 59.8 by a country mile. Compounding this bleak result were figures confirmed that US house prices have slumped 17% year on year.

Other data out today includes UK mortgage lending results and German CPI figures. Outspoken BoE member Blanchflower’s speech today may also yield some interesting insights. But the action will firmly be concentrated on the Fed decision with expectations for a cut of 50bp, however futures are currently pricing in a 40% chance of a 75bp cut.  As a result we anticipate ongoing volatility with all dollar crosses today

Please feel free to contact me (rick.roache@worldfirst.com) if you have any questions or thoughts regarding these updates or if you are interested in a particular event in the calendar. If you would like to discuss your foreign exchange requirements, please contact our:

Corporate Foreign Exchange Team on 020 7801 9050 or our Private Client Currency Exchange Team on 020 7801 9080.

To view any past or present currency blogs please click on the following link www.worldfirst.com/blog

Disclaimer: The above comments are only our views and should not be construed as advice. You should act using your own information and judgement. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgement as of the date of the briefing and are subject to change without notice.

Any rates given are “interbank” i.e. for amounts of £5million and thus are not indicative of rates offered by World First for smaller amounts. E&OE. Definitions of jargon/market terms can be found in our Glossary of Foreign Exchange Terms.

You Might Also Want To Read

• World First’s Morning FX Update - 16th July 2008
• Missiles Up and Sterling Follows - World First’s Morning Update - 6th April 2009
• Fed Joins the QE party - World First’s Sterling Update - 23rd March
• World First Foreign Exchange Podcast - 26 October 2009
• World First Foreign Exchange 10th July 2009 Update: Bank Holds Off Extension, Sterling Holds Up
• World First Foreign Exchange Podcast 20 August 2009
• World First does Movember
• World First Foreign Exchange 20 August 2009 Update: Pound Hit By Desire For More QE
• There May Be Trouble Ahead
• The Bernanke Bombshell - World First’s Morning Update - 19th March 2009
• FOMC Shock The Markets - World First’s Morning Update - 17th December 2008
• Wednesday 4th June
• World First Foreign Exchange Podcast - 20 October 2009
• World First Currency Exchange Podcast - 4 September 2009
• World First Foreign Exchange 23 November 2009 Update: Volatile Week Ahead
• World First Foreign Exchange NZD / AUD Update: 2 November 2009
• World First Foreign Exchange NZD / AUD Update: 9 November 2009
• World First Currency Podcast - 11 September 2009
• Sterling slips as risk appetite moderates, despite bullish services PMI - World First Morning Update - 4th June 2009
• Obama Wins US Election As Dollar Remains Volatile - World First’s Morning Update - 5th November 2008
• World First NZD/AUD Weekly Update - 18th May 2009
• World First’s Morning FX Update - 7th August 2008
• World First NZD/AUD Weekly Update - 4th May 2009
• World First on Farmers Weekly Interactive - 5 February 2009
• Honk If You Need Money - World First’s Morning Update - 10th December 2008
• World First Foreign Exchange 02 February 2010: Politics Once Again Weakens GBP
• World First NZD/AUD Weekly Update - 11th May
• World First Foreign Exchange 3 November 2009 Update: Australia Hikes Rates As Sterling Suffers On Bank News
• Citi Backed Up Before It Falls Down - World First’s Morning Update - 24th November 2008
• World First Foreign Exchange 13 January 2010: Market Close Podcast
• World First’s Morning FX Update - 21st August 2008
• Risk Helps GBP Higher Against EUR - World First’s Morning Update - 5th January 2008
• World First Foreign Exchange 20 November 2009 Update: Pound Idles Lower
• World First Foreign Exchange 21 October 2009 Update: Pound Gains But Is Unable To Hold
• World First NZD/AUD Weekly Update - 24th November 2008
• World First Foreign Exchange 13 October 2009 Update: Further Lows For The Pound, Can CPI Help?
• World First Foreign Exchange 14 December 2009: Market Close Podcast
• Bank Shares Keep Sterling Under Pressure - World First’s Morning Update - 22nd January 2009
• World First Foreign Exchange 08 January 2010: Market Close Podcast
• Geithner’s Assurances Help Sterling Higher - World First’s Currency Exchange Morning Update - 22nd April 2009
• Banks Bailed Out Over Weekend - World First’s Morning FX Update - 29th September 2008
• Interest Rates Bottom Out - World First’s Sterling Update - 22nd December 2008
• World First’s Morning FX Update - 3rd July 2008
• World First Foreign Exchange 05 February 2010: QE is Over but is The EU Dying as Well?
• World First’s Morning FX Update - 8th September 2008
• World First in the press: Mail on Sunday 14 December 2008
• World First Foreign Exchange 7 September 2009 Update: Mixed Non-Farms Figure And Labor Day Hold Markets
• World First Foreign Exchange 6 August 2009 Update: Market Waits For Bank of England, ECB
• Sterling Tested as Dollar Finds Support - World First’s Morning Update - 21st October 2008
• Euro moves to new highs