Forex - US dollar mixed in Sydney midmorning ahead of Fed rate decision |
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Mon, 17 Sep 2007 02:38
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SYDNEY (Thomson Financial) - The US dollar was mixed on light volume in Sydney mid-morning, with the market holding its pattern ahead of Tuesday's key Federal Open Market Committee (FOMC) policy meeting which is expected to deal decisively with issues surrounding the credit market crunchMarkets are on hold ahead of the meeting as traders debate whether there will be a 25 basis points cut in the Fed funds target rate or a 50 basis points cut.The central bank has to weigh up concerns about the credit crunch possibly pushing the US economy into a recession against its overriding issue of controlling inflationary pressures.At 11.00 am (0100 GMT) the dollar was at 115.30 yen from 115.16 in late New York trade, while the euro was at 1.3869 dollars from 1.3872 dollars.'The market now looks ahead to the FOMC result on Tuesday or very early Wednesday morning Asian time,' said John Noonan at Thomson IFR.He said the market has tempered the view that the Fed might ease by 50 basis points in its funds target rate with a 25 basis points cut being more likely.'The hard part is working how the foreign exchange market will react,' said Noonan.'There is a view emerging from some analysts that the US dollar fall has about run its course and the US dollar may rally no matter what the Fed does.'Noonan said if the Fed does disappoint Wall Street by their decision or their statement following their decision, it is probably safe to say that the yen-funded carry trade would follow the Dow lower.GFT senior financial analyst Ian Copsey was of a similar opinion.'So as we come to the FOMC week the market is still debating whether the Fed will cut rates or not,' Copsey said.He said central banks don't like drastic changes and the question is more whether cutting by a quarter of a percentage point will cause more market volatility than a full half a percentage point cut.'I believe they'd prefer to cut by the smaller amount to demonstrate that the issue is under control and the risk is in the process of being re-appraised,' Copsey said.Sydney 11.00 am (0100 GMT)US dollar115.30 yen1.1886 sfrEuro1.3869 usd159.88 yen1.6482 sfr0.6906 stgSterling2.008 usd231.53 yen2.3863 sfrAustralian dollar0.8420 usd0.4192 stg97.110 yenNew Zealand dollar0.7128 usdbruce.hextall@thomson.combhx/jgCOPYRIGHTCopyright Thomson Financial News Limited 2007. All rights reserved.The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
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Forex - US dollar mixed in Sydney trade as players digest Fed discount rate cut 