Forex Review – Dollar gains after Fed minutes signal no QE3

Important: This page is part of archived content and may be outdated.

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.