Yesterday there was not any significant US economic data released apart from the FOMC Meeting Minutes and on the back of this announcement the USD remained relatively firm against most of the major currencies but weakened slightly against the EUR. The FOMC Meeting Minutes did not expose much about what the Fed is planning in the mid-term regarding its policy; however it pointed out that it would cut both the discount and Fed Funds rate to prevent some of the unpleasant effects on the economy that might take place. The Fed rate cut is now expected to be at least 0.5 % and if it is put into effect it could once again shake the greenback. As it stands the U.S. subprime housing crisis is absolutely not over yet and it will not come to an end until 2009 with a total of 150 billion dollars. Although the significant weakness in the emerging markets is due to that crisis the overall global growth remains strong and stable. While the US economy still suffers from the last housing problem, credit difficulty and subprime mortgage complexity, the up coming positive effect is that the U.S. trade deficit is getting smaller as stronger overseas development and a weaker dollar makes U.S. exports more competitive on the global market. Despite that the US dollar might resume its downtrend against the 13 nation currency, due to the fact that the European economy is currently viewed as more diversified and less exposed to the crisis. Towards the end of the month the Fed will make its key interest rate decision which will be closely followed by traders as a further monetary easing will place the greenback under pressure.
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