Market Awaits Additional Data on U.S. Economy and Interest Rate Direction


The European Commercial Bank will be meeting tomorrow, May 8, 2008 to decide on the interest rate level in the Euro zone, and as a result, the U.S. Dollar traded in a very narrow range against the Yen and the Euro in mid-day trading today in Asia.

Investors are anxiously waiting for additional data about the U.S. economy to decide whether or not the Federal Reserve will keep interest rates steady or continue to cut rates.

On May 7, 2008 at 1:00 pm (05:00 GMT) the Euro traded at $1.5504, compared to $1.5512, while the U.S. Dollar traded at 104.58 Yen, compared to 104.88 Yen in morning trading in Sydney.  According to analysts, investors have not yet made up their minds as to whether the U.S. economy is recovering, and which way interest rates are headed.  Some analysts are speculating that the Federal Reserve will hold rates steady at 2% for a couple of months, however, there is a possibility of rates cut by the end of this year.

Since investors are speculating that the European Central Bank will keep interest rates steady at 4% in order to contain inflation, while the Federal Reserve is likely to cut interest rates, the U.S. Dollar will continue to come under pressure.