FOREX: Wednesday results[M]

Despite the early rise US currency collapsed against euro on concerns about Fed pause after May meeting. Today the FOMC meets. As expected, the rate will be increased the 16-th time on 25 b.p. up to 5% from current 4.75% (Federal Funds 25 years диаграмма Federal Funds 50 years диаграмма). But further Fed's politics is steel uncertain. On 27th April Ben Bernanke said that " FED can stop on toughening rate policy"/ It fuelled the possibility of coming rate pause in a 22-month policy of rate rise.
Yen reached a 6-week high against EUR on Tuesday after the article made a hint on coming rising rate in Japan as early as in July. But JPY has reduced its growth and fell from eight-month peak against dollar as participants of the market began to take profit ahead of FOMC. USD has lost 6% against yen and 4,5% against euro during three weeks because of growing concerns that FED can make a pause of rate increase. "Market is waiting for FED meeting",- said Hideki Hayashi from Shinko Securities. "Traders try to put the currencies on a comfortable levels before the meeting begins". The yen rose as the article in Jiji Press said that the Bank of Japan will raise the estimation of economy, having replaced a word "restored" on "developing" in the nearest monthly report. Such change will be the first since 1991- that predicts coming rate lift, the first time in last 6 years. The report of Bank of Japan showed the land prices increase to 15-years high fuelled the expectations of rate growth. "At present time market has positive sentiment upon JPY",- said Kota Kimura, the forex manager from Shinkin Central Bank. "It will be very difficult to change such sentiment," the analyst added.

EUR/USD tested the bids around $1.2660 after the sales of American investment bank. Among buyers was also the European banks which supported EUR up to $1.2700 before the rate step down again. However the new wave of USD sales helped EUR to pick up to offers on $1.2700/10/ Later these offers were absorbed and the rate marked the session high on $1.2780.
GBP/USD has tested $1.8515/20 after the news on suspicious object on London. Then the rate was restored to $1.8545/50. Growth has proceeded after sharp rise of USD. The pound has absorbed offers in area $1.8580/00 and $1.8620/30. Offers on $1.8690/00 have limited the further rate rise.
USD/JPY has tested offers on Y111.90/00. The general decrease in dollar has led the rate to new lows on Y110.80.

Except the FOMC session, today market focus turns to other important economic indicators, including current and trade balance of Germany and also to wholesale prices of the greatest European economy. Also data on industrial production of France and the quarterly inflation report of BoE will be published.