Forex Trading TV Video Blog

Yesterday the greenback continued to trade on a slippery slope and although it only lost some slight ground against the EUR, it did slip significantly against most of the majors. Yesterday was relatively light on U.S data with the main event being the Consumer Confidence figure which released well below the expected of 99.0 at 95.6. This additional piece of negative data only marginally increased the problems the fragile greenback which has been under immense pressure the entire week ahead of today’s release of the Fed’s Interest Rate Statement. The current widespread market expectation is that the Fed will slash its key interest rate by 0.25%. Therefore if the Fed disappoints investors by holding back a rate cut then it will risk upsetting the still-fragile markets and harming the economy. The rationale behind a rate cut by the Fed is too prevent the rising oil prices and falling home values from driving the U.S economy into a recession. Following the Interest Rate Announcement will be the Fed Statement which will be closely followed by investors who will be on the prowl for any hints on future monetary policy. It seems that the Fed will probably come out with an open-ended statement that will shy away from promising any future rate cuts. Since if the Fed hints towards future rate reductions then the greenback will head towards another freefall and it will also revive inflation concerns, which will be problematic for the U.S economy in the long run. In the beginning of October the majority of traders believed that the Fed will cut the interest rate by at least 0.75 % at its next meeting. However they scaled down their expectations to 0.25% on the back of the revised August payroll numbers, which now showed a gain instead of a decline. Nevertheless there has been fresh market turmoil over the last two weeks as there have been further signs of weakness in the housing sector combined with dismal earnings reports of major U.S banks and therefore this has again prompted some investors to believe that the rate cut will be greater than 0.25%.

There is another host of significant U.S data to be released today which includes the ADP Non-Farm Payrolls Report, the Annualized GDP and the Annualized GDP deflator figures. Although the Fed Interest Rate Announcement will be taking centre stage today, it will also be important to watch the ADP report which will give the market an indication of the all important NFP report that we can expect on Friday. The greenback should experience some sharp volatility today and if the interest rate is released inline with expectations then the greenback will continue to plummet before the recovery process can begin.

The fate of the greenback will continue to be questions today, as the decision to cut interest rates by the Fed is imminent. Halloween (Wednesday October 31st), of all days looks to be the one that will see the US Federal Reserve make, what has become nothing short of an obvious move regarding the US economy. Though the dollar remained relatively unchanged yesterday, investors continue to expect the fall of the greenback.

Today will see the release of two key reports that are anticipated to add to the gloomy US economic picture. Firstly, the release of the S&P/ Case-Schiller National Home Price Index is expected to give negative results for the eighth month running. The report measures the changes in prices of single-family homes within 20 major metropolitan cities, and will most probably contribute to the falling trend of the greenback. One hour later at 14:00 GMT, we will see the release of the Consumer Confidence report. Expectations are equally as disappointing; as the report is set to hit 11-month lows and solidify the Feds need to cut rates.

The past weeks have been historic, with the greenback hitting all-time lows against its European counterpart. While traders prepare for the Feds statement we shouldn’t expect any drastic changes in recent trends, as the greenback continues to suffer.