DAILY REPORT THURSDAY 1^ST MAY 2008

Good Morning,

The Federal Reserve Bank announced lat night the anticipated 0.25% Interest Rate cut with relatively minimal effect on the Foreign Exchange Market. The FED changed their accompanying statement with the idea that rates will be left unchanged for the coming months. Any expectations of a Dollar rally have been postponed until today with the release of the US Non Farm Payroll data for April.  Before the Fed decision the US first quarter data was released showing a 0.6 % increase and although this was marginally above expectations, only an increase in inventories prevented the economy from contracting.

With the UK Consumer confidence sinking to its lowest level since 1992 and with house prices recording their first year on year fall for 12 years, Sterling initially fell to a 2 week low against the Dollar yesterday morning reaching 1.9625. Later in the day before the Fed’s announcement , Sterling improved to 1.9850 against the Dollar and 1.2740 level against the Euro.

The FED decision initially provided a boost to the Euro trading up to 1.5640 before falling again to the 1.5520 level again this morning.

Falling economic sentiment in Europe remains a concern with the European Commission sentiment index dropping to its lowest level since August 2005.

Michael Ince

Archive News

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