The consensus amongst forex traders is that following the statement after the FOMC meeting the Federal Reserve is looking for possibly two more ¼ pct rises in interest rates to 5 ¼ pct. The reference to the risks from ‘higher capacity use and elevated energy prices’ suggests it is not yet ready to pause in this tightening cycle, the latest data shows US Capacity Utilization rising to 81.2 pct in February, and crude oil prices hovering around 65 US Dollars a barrel. The full text of the Press Release was published on this blog last night. The US Dollar immediately picked up against the major currencies and has stayed there during the Asian trading session.
The Euro yesterday was initially buoyd in fx markets by a strong IFO survey in Germany and higher than expected money supply data. The perception is that the European Central Bank ( ECB ) is on course to raise rates at their next meeting in May. The Euro sits at 1.2010just above support around the 1.1980 level.

The continued repatriation of funds to Japan, not only for fiscal year end considerations but also reining in of some excessive ‘carry trades’ is causing some instability in neighbouring financial markets such as Australia, as they see a flood of funds disappearing from the Australian Dollar. The Japanese Yen is trading at 117.80 at the start of European trading.
The British Pound should be helped today from a slew of slightly better economic data,( see the calendar printed on this blog ) but following comments from the Bank of England Governor King, UK rates are only going to be cut or left unchanged , with the emphasis on ‘unchanged’. The British Pound has ended the Asian trading day at 1.7430.

The Canadian Dollar is suffering from the narrowing of the spread between Canadian and US interest rates, and the Loonie at 1.1710 seems only to be being supported by firmer crude oil and gold prices.
The pressure on China to revalue the Yuan continues, with a visit now of US Commerce Secretary Carlos Gutierrez to the Chinese capital Beijing. His visit is on the heels of US Senators Schumer, Graham and Coburn, who are leading an effort to force trade and currency "concessions" from China. They were reportedly discussing growing concerns in the US Congress about China's trade practices, currency policy and intellectual property rights. The visits come as the Senate nears a March 31 deadline for a vote on a bill that would impose a high tariff on Chinese goods to counter what they call artificial currency exchange rates that benefit Chinese manufacturers at the expense of American producers. Anyone for fireworks??