Yesterday, the Asian trading session was all about repatriation trades in the Japanese Yen ahead of the end of the Fiscal Year End on March 31st. There was a significant unwinding of Yen ‘carry trades’ particularly against the Australian and New Zealand Dollars closely followed by the Euro. Yen ‘Carry trades’ are trades where investors raise funds in Japan where the funding cost is effectively zero and re-invest them in high-yielding currencies such as the New Zealand and Australian dollars. Today’s activity was similar but much lower volume. Most of what needs to be done by the year end will have been done by now. Any activity that there has been away from the Japanese Yen has been related to book squaring and position adjustment by currency traders ahead of tonight’s FOMC interest rate announcement. There is no doubt from any economist , forecaster or forex trader that the Federal Reserve will raise interest rates ¼% to 4.75%, but what has come increasingly into question over the past week, is what will happen after this. Until a week ago it was the majority opinion that there was one more interest rate hike after that, however, some recent data has put that assumption into doubt. Any comments by the Federal Reserve chairman Ben Bernanke or his colleagues following tonight’s announcement will be crucial to which way the financial markets swing.

German IFO survey data and US Consumer confidence survey data could see brief flurries of activity in the fx markets , but all ears and eyes will be tuned in to Federal Reserve comings and goings at 19.15 GMT. Stock markets were lower as was crude oil yesterday but gold and the metals were firmer.