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Currency Update
The forex markets are quietly mixed in tight range as traders are preparing for tomorrow's FOMC rate announcement. Sterling continues to weaken across the board as BOE's bail out of Northern Rock continues to weigh on the currency. Former Fed chairman Alan Greenspan warned on an interview on Sunday that Fed should be cautious not to in lower interest rates too aggressively considering the risks of resurgence in inflation. Also, he expected that the slump in the housing market would likely deepen further that most expected and record as much as a double-digit drop. Markets have cooled down the speculations of a 50bps hike from Fed on Tuesday but opinions remain divided.
