Today is a very important day for the financial traders from all over the world — Fed is to decide its interest rate policy until the next meeting (if not further). While almost 92% of all traders expected rate cut by 25 basis points — to 4.50% — the main intrigue was concealed in Fed’s formulation and reasons for the cut (or its absence in case they would decide to leave things as they were). With one member voting against rate cut and words like “economic growth was solid in the third quarter” and that “some inflation risks remain”, it is now almost certain that this was the last rate decrease until the end of 2007.
To much surprise of the majority of Forex traders, U.S. macroeconomics data came out very optimistically tuned today. Starting from GDP (advance) at 3.9% in third quarter, which appeared greater than 3.1% expected; ending with September construction spendings which increased by 0.3% (against -0.2% fall in August and and -0.4% expected for that month).
On the bad side of the reports are Chicago PMI with a decrease from 54.2 to 49.7 and a big surprise present for oil bulls — another major drawdown in U.S. commerce crude oil inventories by almost 3.9 million barrels.