Stock Market Watch

Forex Market Update: Dollar Gains Ahead of the FOMC as Investors Expects Squeeze on Quantitative Easing Soon

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The U.S. dollar index edged up on Tuesday as market participants expect the Federal Reserve to offer some hint over when exactly it could start winding down its bond purchase program.

The Federal Reserve’s two-day open market committee meeting (FOMC) will begin from Tuesday and expectations are high that the bank would provide dovish forward looking guidance (low interest rates).

However, investors will be closely watching the Fed’s Chairman, Ben Bernanke’s press briefing on Wednesday, hoping to get some clear hint over when exactly the bank intends to start scaling down its multi-billion dollar bond purchase program.

The dollar has been under pressure in the recent pas after Bernanke during his latest congressional testimony said that accommodating monetary policy was warranted at this point of time. However, he also added that the tapering of the bond purchase program could possibly start later this year.

The U.S. dollar Index, a gauge on U.S. unit’s performance against a basket of major traded currencies, edged up 0.1% to 81.756 after touching its five week low of 81.499 on Monday.

Many currency strategists expect that the Fed will eventually start the scaling down  of the economic stimulating (if not in near future) given the fact that the U.S. economy was showing reasonable improvement.

“The broader dollar strengthening trend remains very much alive,” said analysts at Barclays adding that if the Friday’s non-farm payrolls data show strong numbers then the dollar will strengthen.








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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.

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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