Dollar Uncertain Before Interest Rate Decision

  October 29th, 2008 at 11:33, Andriy Moraru

U.S. dollarThe U.S. dollar traded with an alternate success against the other major currencies as the investors are uncertain before the Fed’s interest rate meeting today and the state of the global financial system.

After a strong growth on the U.S. stock markets yesterday and the second day of a reasonably fast advancement of the Asian stock markets, the investors are unsure whether to continue dumping the risky assets or to return to the pre-crisis portfolios.

The Federal Open Market Committee will probably lower the target funds rate by 50 basis points today — from current 1.5 percent to 1 percent. With the lower oil and energy prices, cheaper imports (due to the stronger dollar), the consumer inflation may become not such a big concern for the Fed, untying its hands to cut the rates to the record lows.

From the technical analysis point of view, the current break in the downward tend of EUR/USD, GBP/USD, EUR/JPY and other such currency pairs isn’t a turning point. There were far more deeper corrections in September, but the bearish trend returned.

The Federal Reserve’s FOMC will announce its interest rate decision today at about 20:15 GMT.

EUR/USD dropped from 1.2814 to 1.2754 as of 9:27 GMT today, with a daily low at 1.2627. GBP/USD rose from 1.6025 to 1.6036 with a daily maximum at 1.6217. USD/JPY went down from 98.20 to 97.32, reaching the daily lowest rate at 96.08.

If you have any questions, comments or opinions regarding the US Dollar, feel free to post them using the commentary form below.

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