New week – new astonishing news.
Optimism is filling Forex which is by the way quite logical, after a long flight from risky assets. However, taking into account that Citi is planning to pay the debt within the TARP initiative, as well as a desire to Abu Dhabi to support the Dubai World with $10 billion to pay out debts, the recovery in the financial sector is very modest. It is obvious that players are afraid to make sharp movements on the eve of a key event of the week - FOMC decision on interest rates – there is such a possibility that the Fed is turning 180 around gives up loose monetary policy. There are even some signs adding confusion: reports on the labor market and consumer spending have raised hopes leaving aside Bernanke’s view on encouraging economic data.
The USA has issued data on PPI which grew more significantly than it was expected. Instead of the forecasted 0.8% the new figures made up to staggering 1.8%. Manufacturing sector also performed 0.8% against former 0.5%.
Today we are expecting FOMC to make its decision on the major economic indicator – interest rate. Considering Euro/dollar has left the price range 1.4840 - 1.4640, thus there is a hope the currency pair decreases up to 1.4400.