Forex News Review – Dollar weakens after Fed meeting

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Euro moved higher against the dollar after the US Federal Reserve policy meeting stated its decision to keep interest rates low until late 2014. In a press conference, Fed Chairman Ben Bernanke signalled that the Fed was prepared to take further steps to stimulate the economy to ensure that the recovery continues. These measures usually have a weakening effect on the dollar. After a choppy session, the EURUSD recovered from an earlier dip to 1.3211 and rose to a US session high of 1.3232, not far from a three week high hit earlier in the European session.

 

Sterling recovered losses made earlier against the dollar after soft UK growth figures. GBPUSD tumbled to 1.6133 following the data in the European session but steadily rose to a fresh seven-month high of 1.6181 late in North American trading. The pound also clawed back losses made against the euro. EURGBP fell to 0.8163 from an earlier high of 0.8217.

 

Dollar jumped against the yen after the FOMC statement , lifting USDJPY to 81.68 before falling back down to previous levels and hovered above 81.30. The pair is expected to remain steady ahead of the Bank of Japan policy meeting on Friday. The Japanese central bank is expected to ease policy, which would weaken yen further. EURJPY stabilized above 107.40.

 

USDCAD hovered near a seven-month low 0.9822. The greenback has declined for the third straight day against the loonie due to interest rate differentials. The Bank of Canada is expected to increase rates at its next policy meeting.