Posts Tagged: FOMC

The trading market has evolved in a rather unexpected way today, due to the fact that the USD started to grow against most of its major counterparts, managing to reach such growth levels as to cause the AUD to fall below parity. This comes as a reaction of the Federal Reserve Bank’s decision of purchasing bonds, which has immediately increased the interest for the US Dollar.

The US Dollar started to widely grow after the moment when the Federal Reserve Bank announced its decision of purchasing long-term securities. This decision caused an instant demand for safe-haven currencies, including the US Dollar, which completely took advantage by the situation. The Federal Open Market Committee decided to maintain the federal funds rate at the value of 0 to 0.25 percent. In its statement, the FOMC said the following: “The Committee intends to purchase, by the end of June 2012, $400 billion of Treasury securities with remaining maturities of 6 years Read more »

After its last few days of continuous decreases, the Euro started to recover some of its losses today on the account of the losses registered by the US Dollar yesterday, which were connected with the release of the US trade balance which shows a deficit larger than expected. Moreover, the minutes of the Federal Open market Committee points out to the fact that the US policy makers have different opinions about the necessity of the quantitative easing.

Based on these facts, the Euro managed to score some gains against the US Dollar as the US trade balance deficit showed a figure of $50.2 billion for the month of May, which is a lot bigger than the expected amount of $44.1 billion and even bigger than the one posted in April, that of $43.6 billion. As well, the FOMC minutes drew the attention upon the fact that the members of the committee have quite different opinions regarding the future Read more »

What has recently happened?

  • The FOMC minutes have showed an increasing divide in the approach for monetary policy
  • The American Dollar continues to face lows against the Euro for the 16th month in a row, period in which it has broken a serious support along the way
  • The ECB rate hike has left the American Dollar even further back in the yield curve

If it has been difficult to be an American Dollar bull during these last 17 months, and the traders that have been were either very speculative traders or traders who are following just the fundamentals when trading, the last week’s incredible lows show us that it will be even more difficult to act as such in the period to come, even if a concentrated effort has been made in order to flush those hold outs by driving the USD’s index to its lowest level. Traders who see this movement as Read more »

Looking at the events that happened during the Tuesdays trade, we had European Financial Ministers come together for a strategy to give emergency loans to Greece in case its plans to cut its budget deficits fails. We also had a better than expected German ZEW Economic sentiment index which helped bolster fundamentals and support the Euro.

The plan by the financial ministers from different European nations is a bit of a financial lifeline to Greece and it amounts to a bet that they would not have to actually call it in. The plan did not specify the size of any loans or which country would offer them or how long they would last and cost, but they underlying guarantee did help boost the Euro in Tuesday’s trading. We also had the S&P take Greece off its ratings watch, which affirms it triple B+ rating. So all around some positive news for Greece, though again like with most Read more »