MORNING BRIEFING : USD rose after Fed’s action

[RTFX-Trading]

MORNING BRIEFING :  USD rose after Fed’s action

What’s new :
United States: Fed raises its discount rate by 25 points
United States: Fed tries to calm down markets
United States: New era on interest rates?
Japan: Nikkei down
Euro area: Greece and the markets need to be reassured
Australia: RBA: rate interests 50 to 100 points below normal
Switzerland: Excellent results for Nestle

Today:


Rates in Asia and Indices:
EURUSD: 1.3537 - 1.3443.
USDCHF: 1.0894 - 1.0826.
GBPUSD: 1.5546 - 1.5382.
EURJPY: 124.36 - 123.54.
USDJPY: 92.09 -  91.68.
DowJones: 10'392.90 +0.81%
NASDAQ: 2'241.71 +0.69%
S & P 500: 1'106.75 +0.66%
Nikkei: 10'123.58 -2.05%
Shanghai: Closed
Gold: $ 1'101.94
Crude Oil: $ 76.75
 
Comments:
The increase in the discount rate (reference rate for loans between banks) by the Fed (U.S. central bank) last night by 25 basis points from 0.50% to 0.75%, has enabled a wave of purchases of the USD. The Pound Sterling and the EUR have suffered most, as the currencies from commodity exporting countries, which also suffered from this rate hike.

After the strong movement that followed the decision of the Fed in an attempt to calm the USD buyers, the Fed was quick to clarify that this increase was normalization and not the beginning of a tightening of monetary policy. However this increase should strengthen the position of the USD bulls already encouraged by the weakness of the EUR and GBP.

If this immediate rate hike does not affect U.S. consumers, it could mark the beginning of the end for the emergency measures, mainly the rate cuts, taken after the financial and real estate crisis of 2009.

In Japan, the Tokyo Stock Exchange reacted with a decrease to the announcement of the Fed. With the near end of publication of company results, which should also mark the end of the repatriation of profits in the archipelago and thus the end of the shopping for Yen, the upward movement of USD/JPY which started in early February could then continue.

The lack of information on how the assist Greece leaves the market uncertain and could force his country to seek IMF aid, says Papaconstantinou, the Greek Minister of Finance, even if he does not expect this to happen.

The Central Bank of Australia (RBA) said that its current interest rates are 50 to 100 points below normal, prompting the GBP/AUD pair to test its low, on the important technical support around 1.7240.

The multinational company Nestlé based in Vevey (Switzerland) announced that the results are above market expectations (3.9%), with an organic growth of 4.1% in 2009, its net profit for the year is amounting to 10 billion CHF and its turnover to 108 billion Swiss francs (approx. EUR 73 billion).

Good day

Pascal Bovay

RTFX Ltd
Trading desk
RTFX Ltd is licensed to conduct investment services business by the Malta Financial Services Authority. This information does not constitute an offer or solicitation and is provided for information purposes only. This information shall not be deemed to constitute advice and should not be relied on as such to enter into a transaction or for any investment decision. Any opinions expressed in this document represent the views of RTFX Ltd at the time of preparation. They are thus subject to change without notice. RTFX Ltd believes that the information contained herein is accurate as at the date of publication. However, no warranty of accuracy is given by RTFX Ltd and no liability in respect of any errors or omissions, including any third party liability, are accepted by RTFX Ltd or any director, officer or employees.