The U.S. Dollar traded mixed today against major currencies as the market’s attention is squarely fixed on the Federal Open Market Committee (FOMC) meeting, which will take place tomorrow.
Analysts are not expecting any change to the Fed’s current interest rate level of 2%, but rather investors will be scrutinizing the accompanying statement from the Federal Reserve for the possibility of an interest rate hike later this year. Since last week, market expectations of an interest rate hike in the near future faded following the release of weak U.S. economic data and additional concerns about the financial system. According to an unnamed official at the Federal Reserve, the market had aggressively priced in rate hikes.
On June 22, 2008, at 00:30 GMT in Sydney, the U.S. Dollar traded at 107.34 Yen, compared to 107.28 Yen, while the Euro traded at $1.5613, compared to $1.5605 in late Friday trading in New York.
Most analysts believe that the Fed will take into account the strengthening of the U.S. currency when reviewing the monetary policy this week. Analysts expect the European Central Bank to hike interest rates by 25 basis points early in July, and if the statement from the FOMC is not hawkish and does not mention the U.S. Dollar, then the U.S. currency will come under extreme pressure.