surprise FOMC meeting

Price actions has been mixed today throughout the US session as the FED started its surprise FOMC meeting today at 1530 GMT time. The USD is likely to face increased volatility throughout the first part of the trading week as the FED may look to adjust the discount arte by 25 bps to 0.75% following February’s adjustment. According to the FOMC “these changes are intended as further normalization of the Federal Reserves lending facilities.” This may bring traders to believe that we could likely see an increase of borrowing costs in the second half of 2010; as the recovery efforts are seen to be taking hold through a number of key economic indicators. Serviced-based activities in a number of the largest economies throughout the world are expected to expand at a faster pace then previously anticipated. Traders have factored in at least one rate hike more then likely for September FOMC meeting. At this point it appears not to be a decision of if the FED will hike rates but when and how many times.