Forex Market Update: Dollar Index Slips Ahead of Fed’s Policy Rate Statement, Pound Gains After BOE Minutes
The U.S. dollar index eased on Wednesday as investors expect that the Federal Reserve’s pull-back of bond purchase program will be mild, to begin with.
The Fed’s two-day open market committee meeting will conclude on Wednesday. At 2:30 p.m. EST, the Fed’s chairman Ben Bernanke will address a press conference. Bernanke will provide the bank’s outlook on the U.S. economy, including the unemployment level. However, the entire spotlight will be on the Federal Reserve’s pull-back plans (bond purchase).
It widely believed that the bank will reduce the asset purchase program by $10 billion to $15 billion while benchmark interest rates are likely to remain at record low levels.
At last check, the Dollar Index, a measure on U.S. unit’s performance against a basket of six major traded currencies, slipped 0.03% to 81.13.
“We expect the Fed to taper by $10 billion and some in the market are pushing for $15 billion. I think they are also going to try and push the message that rates aren’t going to go up anytime soon,” said Paul Bednarczyk, head of research at 4CAST while speaking to Reuters.
Meanwhile, the sterling edged up against the dollar on Wednesday after the Bank of England’s (BOE) latest minutes showed that the policymakers are not in favor of offering more economic stimulating measures.
At last check, the pound gained 0.37% against the dollar to trade at $1.5962.
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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. |