Archived IMT (2010.04.05)

US dollar remains off its Friday lows ahead of the US March services ISM survey (10:00 EDT, 14:00 GMT) and the anticipated Fed Governors meeting at 12:30 EDT (16:30 GMT), which is highly expected to produce a 25-bp increase in the discount rate to 1.00%. This will reduce the spread between the discount rate and the fed funds rate to 0.75%, and as the chart shows (created 3 weeks ago). http://bit.ly/adHYEG the spread will be 25-bps away from regaining its pre-crisis level of 100-bps. Combining Friday's strong NFP, today's expected rate hike and a robust ISM report, the growth and yield case for the US dollar is expected to hold. Meanwhile, the only realistic sources for any JPY strength remain a chinese rate hike, a stock market pullback or unexpectedly strong Japanese figures. Pls see links in previous IMT to register for this week's webinars with Ashraf as part of the 3-day ITC Online Forex Conference.