Forex rebates on every trade - win or lose!

Three decent short scalps off cable this morning. Still cautiously short with stops, while I head off to work :S

Blimey - within a few whiskers of being stopped out there - going for the break now :S

FOMC ups rates to 2.75%, signals inflation concern
AFXU


WASHINGTON (AFX) - The Federal Open Market Committee increased its target for overnight interest rates by a quarter percentage point to 2.75 percent Tuesday. The increase in the federal funds rate was expected by traders and economists on Wall Street. The vote was unanimous. The committee once again concluded that its monetary policy stance remains accommodative and that this 'accommodation' could be removed 'at a pace that is likely to be measured.' But the FOMC signaled it was growing worried about inflation, saying it saw signs that inflation pressures have picked up and pricing pressures are more evident. This is a change from the last FOMC statement on Feb. 2 that inflation remained 'well-contained.'

Text of FOMC statement
AFXU


WASHINGTON (AFX) - The Federal Open Market Committee raised its overnight lending target to 2.75 percent on Tuesday. Here's the statement the committee released following the meeting:

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 2-3/4 percent.

The Committee believes that, even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity. Output evidently continues to grow at a solid pace despite the rise in energy prices, and labor market conditions continue to improve gradually. Though longer-term inflation expectations remain well contained, pressures on inflation have picked up in recent months and pricing power is more evident. The rise in energy prices, however, has not notably fed through to core consumer prices.

The Committee perceives that, with appropriate monetary policy action, the upside and downside risks to the attainment of both sustainable growth and price stability should be kept roughly equal. With underlying inflation expected to be contained, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Ben S. Bernanke; Susan S. Bies; Roger W. Ferguson, Jr.; Edward M. Gramlich; Jack Guynn; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; Anthony M. Santomero; and Gary H. Stern.

In a related action, the Board of Governors unanimously approved a 25-basis-point increase in the discount rate to 3-3/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, and San Francisco.

Cheers prods.
Closed out at 18808, but waiting to wade in again - I may be wrong on this leg, but Asia hasn't got out of bed yet.

USD very strong after FOMC, where now?

DAILY PICKS Tuesday, March 22, 2005 21:02 GMT Daily Report By Forex Grand Capitals http://www.ForexGrandCapitals.com   King of spring...?! Mr. Greenspan keeps "measured" in the speech, yet the USD rallies. Whatever. Will hold both existing longs USD/JPY already opened within the last 36 hours, and one more buying bait placed at higher altitude. The USD players now have a direction and an opportunity. If momentum accelerates too, then no more sleeping pills I guess. A successful knock-knock of USD/CHF nearby 1.20 on a weekly chart though remains key.

Mihai Nichisoiu - Chief Trader - Forex Grand Capitals: Forex Signals and Managed Accounts http://www.ForexGrandCapitals.com Email Address: Info@ForexGrandCapitals.com

Forex - Dollar shakes off losses after U.S. rate hike - UPDATE 4
AFX


NEW YORK (AFX) - The dollar threw off losses to trade higher Tuesday, after the Federal Open Market Committee ordered a widely anticipated rate increase and issued a policy statement some viewed as unexpectedly hawkish.

The euro in late afternoon was at $1.3055, down 0.8 percent on the session, as the dollar rose 0.4 percent to 105.66 yen. Before the FOMC announcement the dollar was lower against both currencies.

The FOMC lifted the fed funds target rate by a quarter point to 2.75 percent, as widely expected.

In its latest policy statement, the committee indicated that inflation pressures are mounting. Some observers interpreted the statement about inflation as a signal the central bank could embark on a more aggressive course of rate increases.

'Though longer-term inflationary expectations remain well contained, pressures on inflation have picked up in recent months and pricing power is more evident,' the FOMC said.

'The rise in energy prices, however, has not notably fed through to consumer prices,' the statement continued.

The FOMC also called its monetary policy stance 'accommodative' and said this 'accommodation' could be removed 'at a pace that is likely to be measured.'

Refco Senior Currency Analyst Mike Malpede said the references to inflation initially were viewed as unexpectedly hawkish.

But he cautioned that investors may well come up with alternative views of the statement as they continue to scrutinize its details throughout the week.

'The bottom line is the Fed left the door open for more rate hikes,' Malpede said. 'The Fed indicated that there is inflation risk and the risks could be balanced, if the Fed takes appropriate action.'

Bank of New York Senior Currency Strategist Michael Woolfolk said market players chose to view the references to inflation 'to mean that the Fed is likely to continue raising interest rates higher than expected this year against a backdrop of strong U.S.economic growth.'

Earlier Tuesday the dollar was pressured by news that a surge in energy prices pushed the U.S. producer price index for finished goods up 0.4 percent in February.

Excluding big increases in food and energy prices, the core PPI increased 0.1 percent. Economists were forecasting a 0.3 percent gain in the PPI and 0.1 percent in the core rate.

On Wednesday the market will focus on consumer price data for February. The average estimate of economists polled by MarketWatch is for a 0.3 percent increase in the headline index, alongside a 0.2 percent advance in the core rate.

Existing home sales figures for February also are due Wednesday. MarketWatch forecasts 6.69 million sales.

Overnight in Tokyo, the minutes of the Bank of Japan's Feb. 16-17 policy board meeting were released Tuesday, and showed that board members again discussed reducing the account balance target in light of weak fund demand from banks.

The balance of current account deposits held by private financial institutions at the central bank is its primary tool for keeping lending rates near zero. It is now kept in a range of 30 trillion to 35 trillion yen.

This year, the BOJ's open-market operations have sometimes met with bidding shortfalls. A cut in the target balance to address this would effectively be the first tightening of monetary policy since August 2000 -- but analysts say the Bank of Japan would be careful not to describe it as such to markets.

The point is moot for the time being. The minutes of the latest meeting showed that all members agreed that the liquidity target shouldn't be touched for a while, as the Japanese economy appears to be pausing.

This story was supplied by MarketWatch. For further information see www.marketwatch.com.

DAILY FX MARKET ALERTS

Tuesday, March 22, 2005 19:31 GMT Daily Report By Fxtodayhttp://www.fxtoday.co.uk

Latest currency alerts

23-03-05. As expected, the Fed increased interest rates by 0.25% to 2.75%. It also retained the expectation that interest rates can be raised at a measured rate. This will dampen expectations that the Fed will tighten more aggressively. This should stem profit taking in high-yield currencies and should also lessen the potential for short-term dollar buying, although the immediate market action has been to strengthen the dollar.

Just when I thought I'm getting my head around what drives the market the Dollar strengthens when I thought it would weaken after Greenspam's statement. Or am I missing something? They're suggesting inflation might rear it's head, interest rates increased, both mean consumer demand reduces, DOW dives today as a consequence.

I suppose the dollar strengthening is bad news for Oil prices in the rest of the world but is it good news for the US? It is certainly bad news for oil prices in the rest of the world.

Sorry, just having a waffle - shows my limited grasp of the forex mkt at the moment.

Would any of the gurus have a look at GBP/JPY please. Looks to me to have turned - a good 700 points available?

edit - will wait for a little bounce up to say 200.00 before considering a short.

It strikes me that the Asians didn't have a clue what to do with the Dollar overnight, so they left it alone until London had worked it out and concentrated on the Yen instead.

Seymour,

Concur re the Sterling Yen and Euro Yen which had been offering some support also looks to have turned now.

Re oil, I wouldn't worry too much atm. The concept is that oil drives the Dollar and Yen, rather than the other way around. Generally high oil = weak Dollar, but the FX market seems more concerned about the twin deficits and the interest rate differential/carry trade aspect atm. They'll probably wait until the driving season looms a bit closer before worrying too much about oil again.

Thanks Hilary - I really appreciate it.

Seymour,

Although the GBP and EUR/JPY shorts do look to offer high potential, you should be aware of the high carry costs because of the BoJ next-to-zero interest rate policy. Sterling will probably cost you around 3.5 to 4 pips each night. For that reason alone, you may well see some players sidelined till after Easter.

Talking of Easter, I'll be away skiing next week. The Daily FX weekly calendar gif which is in the thread header currently has the URL of

http://www.dailyfx.com/images/stories/Calendar/calendar03-18-05.gif

On the assumption that next week's calendar will be obtained by adding 7 days, will one of the am moderators be able to alter the thread header accordingly please?

Have a good break Hilary - hope the skiing is excellent. I am away as well so won't be making any trades. Might be worth emailing one of the moneyam staff.

Just closed EUR/USD short from this morning for +47, which was nice

Good trade, jeffmack. I had a short on Cable from 855 and closed it for +12 on an oco, only to come back and see it had dropped another 50, and promptly lost it by shorting right on the turn at 91. Looks as if they may both be turning down again, though.

Well I've not known what to do for the best with the Europeans this morning, so instead have been running Dollar longs on USD/CAD and AUD/USD.

edit: Just closed the Loonie ..... in 2 minds on the Aussie.

Stuck with cable last night, and still running it.