Wednesday 30th April 2008

The USD is still holding on in there and indeed has made further gains against the Euro and other leading currencies over the last few trading. sessions. The market shrugged off disappointing US consumer confidence news yesterday as it fell to a 5 year low and also data showed a record drop in home prices in February.

The Fed is expected to give the market a further 25bp easing tonight but the market 'buzz' is the fear that inflation is set to accelerate and this will cause the US central bank to signal a pause to its aggressive campaign of lowering interest rates.

News that the April confidence number fell to 62.3 (lowest reading since March 2003) does not bode well for Friday's April employment data which will confirm that the US is indeed in recession.

Despite this news the USD is doing well out there and we will continue to respect and have discipline with the FX model.