Stock Market Watch

Forex Market Update: Dollar Index Mainly Flat

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The U.S. dollar traded mainly flat against major traded currencies on Monday as investors remained edgy to take fresh positions on the U.S. unit ahead of the Federal Reserve’s minutes release, later this week.

At last check, the dollar index, a gauge on U.S. dollar’s performance against six rival currencies, slipped 0.06% to 81.25.

The WSJ Index, in which the indexing criteria is slightly broader, inched up 0.06% to 73.59.

The Fed is scheduled to release its minutes for the open market committee meeting (FOMC -July 30-31) on Wednesday and market participants will be anxious to know the policymakers’ view on the ongoing quantitative easing.

Rising fear that the Fed could soon start to taper its bond purchase program resulted in massive sell-off in equity markets last week while yields on U.S. treasuries spiked.

“The minutes could point to the Fed tapering stimulus next month. This, coupled with rising U.S. Treasury yields, could lead to some dollar strength this week,” said Marcus Hettinger, global FX strategist at Credit Suisse, according to Reuters.

On the other hand, if the Fed continues to adopt a dovish policy stance or fails to provide any definitive forecast on when it might start pulling back the quantitative easing (QE3) then the dollar could weaken against major currencies.

Adam Cole, global head at FX strategy at RBC while speaking to Reuters said that the general perception is tapering process could begin from September. However, Cole added, “if the minutes don’t give any strong hints of that, there is a risk expectations start to drift from September to October.”

 








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edliston
Post Written By: Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.

Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing.

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