Fed Cut Interest Rate by 0.25%

Posted on December 12, 2007
Filed Under Forex News |

Finally the biggest mover of the currency market has passed. As mentioned in my previous article, as expected, Federal Reserve has lowered Fed fund and discount rate to 4.25% from previous 4.5%.

To many analysts, that was a disappointment as they had hoped for a bigger cut of 0.5%. In the stock market, immediately after the announcement, Dow dived deep down and finished at nearly 300 points, or 2.1 percent lower than previous session. While the S&P and Nasdaq each fell about 2.5 percent at market closed.

For Forex trader, with the big monster out of the way, it’s back to swimming time in calmer water. In my view, the quarter point cut had already been factored in. Regardless of whether interest rate remained unchanged or cut by a quarter percentage point. It will not stop the bearish mood of the US dollar within the short term.

Cheers, Kampai, Proscht^^!!