Forex Blog: Currency Trading News & Analysis.

May 2nd 2006

Markets eye data for clues on USD

The prevailing explanation for the sudden, precipitous fall by the USD is that the Fed is nearing the end of its current monetary tightening cycle, at which point interest rate differentials between the US and the rest of the world will begin to narrow. In this vein, Ben Bernanke’s hint that the Fed might end its cycle earlier than expected probably hastened the dollar’s decline. Forex traders will admittedly be watching economic indicators closely for insight into the Fed’s likely course of action. This includes data on the housing market, for the Fed could conceivably continue to raise rates as long as the housing market remains overly buoyant. Goldseek reports:

The economy grew 4.8% in the first quarter of this year. Inflation is at the upper end of the Fed’s comfort level. If we see another two months of that type of environment, it is likely they will raise rates yet again…

Read More: To Pause or Not to Pause

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© 2004 - 2024 Forex Currency charts © their sources. While we aim to analyze and try to forceast the forex markets, none of what we publish should be taken as personalized investment advice. Forex exchange rates depend on many factors like monetary policy, currency inflation, and geo-political risks that may not be forseen. Forex trading & investing involves a significant risk of loss.