Currency Market Awaits Tomorrow's Fed Session
NEW YORK -- While the Good Friday holiday in many countries makes this trading week a bit shorter already, to most market players it may as well have only one day: Tuesday.</br></br>Analysts say that all currency movements this week will revolve around what comes out of the Federal Reserve's Federal Open Market Committee meeting tomorrow, when the group meets to decide whether to crank up U.S. interest rates.</br></br>The market is largely convinced that the Fed will act to block potential inflationary pressure by raising the federal-funds target rate a quarter-point. If so, the dollar will benefit, analysts say.</br></br>But even if the Fed holds rates where they are, the market will still hope for higher rates by the next FOMC meeting on May 20, so the dollar won't lose too much ground, said John Rothfield, international economist at NationsBank in Chicago.</br></br>The federal-funds rate, the overnight rate at which banks lend to one another, stands at 5.25%. Higher interest rates tend to help the dollar because they make assets denominated in dollars more attractive to investors.