Archived IMT (2010.04.02)

YESTERDAY's ANNOUNCEMENT on the website of the Federal Reserve Board http://bit.ly/bVCNAh about a closed meeting will be held on Monday, could signal the Fed will raise its discount by 25-bps to 1.0% as a way to further normalize the spread between the discount rate and fed funds rate back to pre-crisis levels. Making such a pre-announcement would reduce risks of upsetting markets as it is well telegraphed (not a surprise as was on the Feb 18 discount rate), but also would be done on Monday, when most European equity markets will be closed and US markets at thin liquidity. Whether the combination of todays US jobs report and Mondays potential discount hike would prop the US dollar, this has yet to be seen. Also, traders could conclude that a Fed decision to tighten might be driven partly its advanced knowledge of Fridays jobs figures. YEN WEAKNESS may ensue in the event of an overshoot in US payrolls (above 170-180K and unemployment rate below 9.7%), while USD strength could emerge gradually. $1.53 and $1.3570 in GBPUSD and EURUSD will be key levels to watch for todays FX session.