Daily Forex Snapshots

Asian Session - Fed Cuts 25bp

May 01, 2008 9:35 AM CEST

G10 Advancers and Decliners vs USD

	NOK	0.83
	JPY	0.67
	CHF	0.36
	EUR	0.33
	SEK	0.31
	DKK	0.32
	GBP	0.23
	CAD	-0.09
	NZD	-0.17
	AUD	-0.30

Global Indexes

Current Level

% Change

Hang Seng Index	25,755.35	- 0.61
Shanghai Index	3,693.11	+ 4.81
FTSE futures	6,097.00	- 0.04
DJIA futures	12,820.00	+ 0.10
S&P future	1,387.10	+ 0.07
Nasdaq futures	1,928.25	+ 0.26

World Markets

Current Level

% Change

Gold	875.15	- 0.27
Silver	16.94	+ 0.47
VIX	20.79	+ 2.71
Crude wti	114.69	+ 1.08
USD Index	72.53	+ 0.03

Todays Calender

Estimates

Country / GMT

CIPS/RBS Report on Manufacturing (Apr)	50.8	51.3	UK / 9.30
Personal Income (Mar)	0.4%	0.5%	US / 13.30
Personal Spending (Mar)	0.2%	0.1%	US / 13.30
PCE Deflator (Mar)	0.3%(+3.2%	3.4%	US / 13.30
Core PCE Deflator (Mar)	0.1%(+2.0%	0.1%(+2.0%	US / 13.30
Initial Jobless Claims (Apr 26th)	363k	342k	US / 13.30
ISM Manufacturing Index (Apr)	48.0	48.6	US / 15.00
Construction Spending (Mar)	-0.7%	-0.3%	US / 15.00

Currency Tech

AUDUSD
R 3: 0.9544
R 2: 0.9496
R 1: 0.9473
CURRENT: 0.9403
S 1: 0.9311
S 2: 0.9294
S 3: 0.9272

EURJPY
R 3: 164.98
R 2: 163.88
R 1: 163.25
CURRENT: 161.98
S 1: 161.61
S 2: 161.11
S 3: 160.81

USDSGD
R 3: 1.3887
R 2: 1.3746
R 1: 1.3659
CURRENT: 1.3570
S 1: 1.3552
S 2: 1.3470
S 3: 1.3318

Market Brief

Usd was quiet in Asian session as market absorbed the FOMC rate decision and accompanying statement. A majority of the Asian and European financial markets are closed for holidays today which will keep trading subdued throughout the day. The 25bp cut by the Fed without a clear signal for a pause, disappointed the Usd bulls and Eurusd rallied to 1.5640 on the announcement. The Fed signaled more of a neutral bias than easing by dropping the references to “downside risks” and acting in a “timely manner” however stating that the further policy adjustment will depend upon “economic and financial developments”, which will keep markets thinking about the possibility of further easing in 8 weeks.

Equities and FI followed a similar path to Usd. first trading on the growing optimism but fell as the Fed statement failed to live up to expectations. NASDAQ (-0.55 %) did not managed to maintain in positive territory. Asian markets are slightly lower this morning, with Nikkei down -0.6 % , the Hang Seng lower by – 0.6 % too. US 2 yr yields were higher ahead of the FOMC, and attempted to rally immediately after, then surrendered and dropped sharply down 9.5bp on the day. Perhaps a telling sign of the Usd.

The US economic data will begin today with a string of critical US indicators. First of all we would be remiss in not mentioning yesterday US GDP q1 which printed above expectations at 0.6% and ADP. Due to the GDP surprise we are beginning to hear some speculation that the US might actually avoid a recession or at least the technical definition (especially given the fiscal stimulus which is about to kick in). We once again need to take the ADP 10k gain with a bit of hesitation since the survey has recently been overly optimistic and overstate official figures (NFP on Fridays).

US ISM manufacturing index is expected to slip further but is consistent with economic weakness rather than outright recession. We are expecting interest in income and spending. While not expected to be a major market mover, we believe this will be a decent gauge for the health of the US consumer.

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