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March certainly was the active month in the online forex trading and currency market. The Euro against the U.S. Dollars, hit an all time high less than 100 pips away from 1.60 value meanwhile USD/JPY fell to an intra day low of 95.76 value. Those daily ranges of these two currencies have also expanded as 1 month volatility in the Euro against U.S. Dollars went the highest price since 2004. This suggests that volatility has hit a abnormal rate, which means that it may soon turn back to the mean. In other words, the days of 200 pip changes in range between the Euro and U.S. Dollars will might be changing very soon until will not exist.
The price action in the U.S. Dollars post non-farm payrolls indicate that the traders are very divided on the outlook for the USD and more specifically US monetary policy. Three consecutive months of job losses warrant a rate cut from the Fed Reserve, as we see it the job numbers alone may not be enough to convince the Fed to cut 50bp instead of 25.
Next week, there are not enough economic data for speculations that could help shed more light on what is going to be the action the Fed Reserve should take during the end of the March.
The only important U.S. data on this frame of time is the trade balance and import prices as well as consumer confidence that are unfortunately not not to be discussed this week.
The minutes from the March 18 FOMC meeting could help the speculation on the above issue but even the Fed has probably not decided what should be the action at the end of the month. The labor market is deteriorating and will get lower. ForexCult.com do not expect job growth to turn positive for at least another 6 months. looking on the outlook of growth the Federal Reserve should bring interest rates down to 1.75 percent on April 30.
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Posted on Apr-06-2008 by Lee Walter
