Fed Makes Week Bad for Dollar
The minutes of Federal Reserve’s monetary policy meeting reignited speculations among investors about the third round of quantitative easing. Those talks defined the performance of the US dollar this week. The performance that, unsurprisingly, was not very impressive.
The Fed minutes suggested that monetary easing is still in the card and is, in fact, not very far away. There are still doubts that the US central bank would initiate QE3, but the minutes increased the number of those market participants who believe that QE is coming. Such expectations, as one might guess, are not dollar-friendly.
As for news from Europe, there were more speculations than actual news. The leaders of Greece, Germany and France meet to discuss an extension of Greek debt and changing terms of the bailout. Initially, investors had high hopes for the meetings, yet by the end of the week the mood changed to pessimism. The resulting risk aversion allowed the dollar to trim its losses.
EUR/USD climbed from 1.2338 to the weekly high of 1.2590, the highest price since July 4, and closed at 1.2511. GBP/USD closed at 1.5809, following the jump from 1.5695 to 1.5911 — the high not seen since May 17. USD/JPY fell from 79.56 78.66 this week and its weekly low was at 78.27.
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Earlier News About the US Dollar:
- Fed Stimulus Expectations Weigh on US Dollar against the Euro (2012-08-23)
- US Dollar Gains the Upper Hand Today (2012-08-22)
- US Dollar Weakens as Hope Rises for the Eurozone (2012-08-21)
- US Dollar Higher on Expected Volatility, Better Data (2012-08-17)
- Risk Appetite Appears and Sends US Dollar Lower (2012-08-16)