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Posted January 30th, 2014 by Charles Purdy

US continues to taper

The US dollar had a tentative day yesterday ahead of last night’s decision by the Federal Open Market Committee (FOMC). With no last minute data to give any final support or resistance, US dollar markets remained within a fairly narrow range. At the meeting, the FOMC voted to reduce its extraordinary funding of the economy by a further US$10 billion which brings it down to US$65 billion per month. The effect on the US dollar itself has been minimal as this reduction was in line with expectations. There is a fair amount of data today for investors to mull over in addition to last night’s FOMC announcement, starting with an advance growth figure and unemployment claims. Following this are pending home sales, with the three of sets of data representing important indicators as to the state of the economy.

It seems fairly clear that the quantitative easing programme will be no more by the end of this year, which means that the focus will change to the interest rate policy. Although the Federal Reserve has made it quite clear that interest rates will be kept low for a long time, each piece of economic data especially employment rates will be closely analysed as the market try’s to second guess when they will be increased.

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Posted December 17th, 2013 by Charles Purdy

US dollar awaits tomorrows Federal Reserve announcement tomorrow

The US dollar had a disappointing start to the week, as investors faced some uncertainty over the advent of the tapering of the Federal Reserve’s quantitative easing program. A few smaller economic indicators came in ahead of expectations which helped raise expectations that we could see the central bank taper at Wednesday meeting hopes for the US, but many investors feel that even if the Federal Reserve does decide to taper, interest rates will be kept at record lows for the whole of 2014. The impact of any reduction was also in question, with some thinking the impact may be minimal or already priced in.

Posted December 10th, 2013 by Charles Purdy

US dollar weakens slightly

The US dollar had little to feed on yesterday, with investors hungry for more signs as to when the Federal Reserve may look to start tapering its quantitative easing program. After last week’s strong data released, especially on the labour front, yesterday held nothing to sustain the US dollar’s advance, and as a result we saw the American currency fall for the first time in five days against sterling. Today is likely to continue in the same vein, with data again drawing a blank for the day, and so any further speculation surrounding the possibility of a December taper could exert its influence over the markets as we draw closer to the central bank’s decision a week on Wednesday.

Posted September 19th, 2013 by Charles Purdy

US dollar weakens as Federal Reserve doesn’t taper

The US dollar wasn’t having a good day prior to the announcement from the Federal Reserve on its programme on quantitative easing and once it was announced that they weren’t going to start tapering it lost ground very very quickly against all major currencies. There seems to have been two key factors at play. The US economy isn’t doing as well as hoped for and interest rates have started to increase to unacceptable levels. Hence the decision to keep the programme of cheap money going for the time being. This highlights the danger of central bank “guidance” if all the variables aren’t fully understood by either the central bank and/or the markets. Following on from this, today’s important releases are the unemployment claims figure, a highly influential economic indicator, and the existing home sales. Call your trader now for the latest price on the US dollar, as the fallout from last night continues.

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