On the FOMC meeting on Wed 18 Feb 09

In the run up to the last 3 FOMC meetings, the USD was generally sold as investors pre-empted a decision by the Feb to officially move into QE or Quantitative Easing through the outright purchase of Treasuries to put cash directly into the economy.

That would release a large supply of USD into the market, thus pushing down the price of the USD.

Of course, QE did not materialise. Hence, in the following 2-3 days after the FOMC meetings, the USD had been promptly bought up again as the market sought safe haven protection.

How about the FOMC meeting ending tommorrow?

I think the same might happen because I personally believe that the Fed would as much as possible implement QE as the last resort.

Given that the US government's unconventional solutions are reaping results to some extent, leading to lower credit yields spreads and all time low 30 yr mortgage rates, there's no real need right now to implement QE.

I expect to see USD support in the near term. Especially so when huge questions marks still hang over the US automakers and banks' toxic assets.

And until at least we are sure we can see a bottom in the economy.