Absence of Quantitative Easing Results in Good Week for Dollar

  March 17th, 2012 at 18:27, Vladimir Vyun

Panoramic view on many US hundred-dollar billsThe US dollar had an interesting week with ups and downs, but in general it can be considered good for the currency as the Federal Reserve’s decision to refrain from quantitative easing made it possible for the dollar to appreciate in the near future.

There was plenty of fundamental data that bolstered the US currency, but the decision of the Federal Reserve not to add more stimulus for the economy was the most important. Many market participants were expecting some form of QE3 and priced it in. Therefore, the greenback surged after easing hadn’t come to pass. The possibility of QE still remains, but the dollar is likely to remain strong for some time.

The performance of the greenback was slightly different versus different currencies, but the trend was generally similar: weakness at the very beginning of the week, surge after Fed announcement and the gradual decline by the weekend. At the end, however, the dollar retained its gains against some of currencies. The greenback had some small losses against some higher-yielding currencies as the positive reports from the United States spurred risk appetite on the Forex market.

EUR/USD opened at 1.3111, fell to 1.3004 and rebounded to close at 1.3170 this week. GBP/USD closed at 1.5841 after opening at 1.5670 and dropping to 1.5601. USD/JPY went up from 82.52 to 83.43, while the weekly high of 84.18 was the highest since April 13; that was the sixth weekly gain in a row.

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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