Foreign Exchange Market awaits this Week’s U.S. Economic Data

Starting today, the Federal Reserve will have a two day policy meeting during which a decision will be made regarding the direction of interest rates, i.e. whether or not to cut them.  Some investors anticipate that the Federal Reserve will reduce interest rates by 25 basis points.

Prior to the Federal Reserve announcement on Wednesday with regard to the interest rates, the U.S. economic data for the first quarter will be released.  The market is anxiously waiting for this week’s data, which will be scrutinized to gauge the future direction of the economy, as well as interest rates.  Some analysts are speculating that future additional interest rate cuts will soon be coming to an end.

On April 29, 2008 at 01:00 (05:00 GMT), the Euro traded at $1.5656 compared to $1.5652, while the Yen traded at 104.24 Yen, compared to 104.23 Yen in early morning trading in Sydney.  Financial markets in Japan were closed because of a public holiday.

Investors’ uncertainty about the U.S. economy, whether it will register negative growth, coupled with the direction of interest rates, has caused most investors in the market to play the wait-and-see game.