The Federal Open Market Committee will be meeting today to discuss interest rate policy issues. Investors are awaiting the outcome of this meeting which will give them an indication of the direction of the interest rates in the U.S. Consequently, the U.S. Dollar was steady against several major currencies in early morning trading in Sydney today.
In overnight trading against the Euro, the U.S. Dollar lost some of the initial gains made after the recently released U.S. data, comprised of leading economic indicators, boosted the currency. Because the data was better than expected, analysts have concluded that the recent efforts by the Federal Reserve to revive the U.S. economy were working. The recent strength of the U.S. currency is due in part to investors’ belief that the Federal Reserve will no longer cut interest rates, but rather will start to hike rates by the end of the year.
On May 20, 2008, at 10:15 am (00:15 GMT) in Sydney, the U.S. Dollar traded at 104.44 Yen, compared to 104.35 Yen while the Euro traded at $1.5513 compared to $1.5505 in late trading in New York.
Authorities of the Bank of Japan will be meeting today to discuss, among other things, interest rates. It is widely expected by analysts that the Central Bank will hold interest rates steady.