On Tuesday when Fed unexpectedly slashed the main rate by 75bp, EUR/USD rallied by a massive 320 pips but then declined to below 1.4600 on Wednesday after meeting resistance around 1.4690. However, USD/CHF continued to fall on Wednesday, and is quite close to its all-time low around 1.0835. If you want to take advantage of USD weakness, it may be better to focus on Swissy since EUR/USD’s upward surge may be slowed down by lingering fears of an ECB rate cut in the near term (see EUR/JPY).

There are also rumours of European banks taking big mortgage debt hits soon.

ECB’s Trichet said today he’s committed to fighting inflation even in “demanding times of significant market correction and turbulences”, quashing talk the ECB may follow the Fed in cutting rates.

This period may not be good to trade yen-crosses as their performance on a daily basis depends largely on how stock markets perform and stock markets are very confused right now.

Fed fund futures are pricing in 46% chance of a 75 bp cut next week, vs 54% for 50 bp.

Watch the forex video below:

German IFO 0900 GMT

US initial jobless claims 1330 GMT

US existing home sales 1500 GMT

US Treasury’s Paulson and ECB’s Trichet speak on risk 1620 GMT

Former Fed’s Greenspan speaks on economy 1930 GMT

Japan CPI 2330 GMT

Posted in Categories: Forex, Videos.

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