Fed to Cut Rates

Interest rates seem to be dominating forex newswires this week.  Yesterday, it was reported that the ECB insinuated that it will hike rates at its meeting next month.  meanwhile, America's Federal Reserve Bank will probably cut rates at its meeting later this week.  Fortunateky for Dollar bulls, the consensus is that the Fed will only be cutting rates by 25 basis points, instead of the 50 that was predicted last week, bringing the benchmark Federal Funds rate down to 4.25%, and narrowing the gap with EU rates to 50 basis points.  However, if the rate cuts do what ther supposed to do, then the US economy should be eased out of the credit crunch and brought back to life, which would spell good news for the USD.

Read More: Dollar slips as focus turns to expected US rate cut