Forex News

The U.S. dollar continued its weekly decline today, as the market participants awaited the results of the European Central Bank and the Bank of England monetary meetings.

The dollar is still trading near its record low value against the euro today, but it has managed to recover somewhat from the yesterday’s fall after the oil prices corrected on the increased oil inventories in U.S.

The release of the FOMC minutes for January 29/30 meeting today gave traders more insight about the Fed’s vision and strategy. Dollar started to lose its positions right after the release and shortly reversed its daily gain against euro.

The Singapore dollar rose today during the Asian Forex trading session as the market analysts expected the Federal Reserve of U.S. to lower the interest rate at the next meeting, widening the rates difference for these two currencies.

The Australian dollar gained yesterday after the Federal Reserve announced an emergency rate cut from 4.25% to 3.50%. It also continued to gain today through the most of the Asian trading session, but has already went down past the daily opening price.

Today, the Federal Reserve System decreased the national benchmark interest rate by 0.75% — from 4.25% down to 3.50%. This was an emergent move to stimulate the financial liquidity amidst the tumbling stock markets.

The U.S. Federal Open Market Committee lowered its interest rate for open market operations by 25 basis points to 4.25%, while the discount rate for central bank to banks type of lending lending was also cut by 0.25% to 4.75%.

Little time remains before today’s FOMC meeting, which will decide the future target interest rate for the U.S. banks. Dollar gained a some weight against euro on some marginal expectations that Federal Reserve will cut rates by just 25 basis points instead of 50 points predicted by the current futures rate.

U.S. dollar ended this week on a rising edge against euro, pound and yen after Fed’s Chairman Ben Bernanke joined Donald Kohn in his hinting the markets, that next interest rates cut will be most probably made during FOMC’s December 11 meeting.

Federal Reserve’s FOMC published its first meeting minutes to include the 3-year projections of the committee members regarding the GDP growth, consumer prices inflation and unemployment rate. While the average projection expectations didn’t differ greatly (except for the year 2008) from this year’s results, the uncertainty of the inflation projections spoke for itself - Fed is unsure of the impact the interest rates manipulations will have on the consumer prices growth.