Stock Market Watch

Forex Market Update: Dollar Index Up Ahead of Fed’s Minutes

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The dollar index rose while the U.S. dollar recovered from its six week low level against the euro on Wednesday amid expectation that the Federal Reserve’s minutes from the most recent open market committee meeting (FOMC) could signal tapering of the bond purchase program from the next month.

At last check, the dollar Index, a gauge on U.S. unit’s performance against a basket of six major currencies, rose 0.18% to 81.09.

The Fed is expected to release its minutes at 2:00 p.m. EST.

It widely speculated that despite absence of any inflationary pressure, the policymakers could eventually start the pullback of the economic stimulating measures as the labor market has been showing gradual recovery. Several policymakers earlier this month hinted at possible start of the tapering process in any of the this year’s remaining three FOMCs.

“The Fed minutes are very important, and perhaps some are getting worried that risks are tilted towards a disappointment,” said Danske Bank FX strategist Kasper Kirkegaard, according to Reuters.

“Our main scenario is that the Fed will begin tapering in September. If the Fed shows any concerns about low inflation or that they need to see a further improvement in the labour markets before tapering, it could send the dollar lower,” added Kirkegaard.

Against the euro, the dollar was last up 0.25% to trade at $1.3384 while the dollar was last up 0.22% against the Japanese currency to trade at 97.48 yen.








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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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