Forex Review – Dollar gains after Fed minutes signal no QE3

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Euro fell sharply against the dollar after the U.S. Federal Reserve released minutes from its March policy meeting that indicated policy makers appeared less willing to launch a new round of monetary stimulus through a third round of quantitative easing. This bond buying measures usually weakens the dollar. EURUSD dropped 125 pips  to 1.3212 after the news.  Earlier in European trading, a high of1.3366 was reached.

 

Sterling tracked the euro lower, moving off its 4-1/2 month high against the dollar. GBPUSD slid to 1.5890 from pre-Fed policy minutes level of 1.5970.

 

The dollar shot up against the yen, rising over 1 percent late in the North American session after the Fed minutes. USDJPY hit a day high of 82.98 compared to an earlier low of 81.54.

 

The Australian dollar fell against the greenback to a 2-1/2 low in the New York session. The aussie had been declining since early Tuesday following news that the Reserve Bank of Australia kept rates unchanged, and had a more dovish tone on the economy. AUDUSD fell to its lowest level since mid-January reaching 1.0300, dropping 1.5 percent from the day high.

 

Gold was one of the biggest losers today after the precious metal fell 2 percent for its biggest one-day drop in a month . This was due to the U.S. dollar strengthening. Gold and dollar have an inverse price relationship since the precious commodity is priced in USD. Spot gold prices fell to $1,638.33 versus an earlier high of  $1,680.58.