By: Barbara Zigah
Yesterday’s release of the minutes from last month’s Federal Open Market Committee policy meeting spurred on investor speculation that the Fed will soon increase their QE measures. According to the meeting minutes, FOMC officials agreed that the floundering American economy is in need of more assistance, and discussions of how best to go about providing that ensued.
With QE expectations rising, the market has become U.S. dollar-short, and there is now worry of a rebound in the making. Investors had hoped that the yield rise in U.S. Treasures would provide a lift, but that was not to be the case; the U.S. Dollar Index slipped to 77.139 .DXY, a decline of .2% and slightly off the 9-month trough struck last week.
Meanwhile, comments from one member of the European Central Bank highlighted policy differences between the two economies. The net affect was the greenback coming under significant selling pressure against the Euro in Asia.
As reported at 1:30 p.m. (JST) in Tokyo, the U.S. Dollar slipped against the common currency, trading at $1.3965, a loss of .3%; resistance is pegged at $1.3985. Traders had originally expected to see the Euro heading for an 8-month peak, but caution prevailed; one banker in Japan commented that while $1.40 is seen as psychologically important, should the Euro breach it, it’s likely that the Chairman of the Eurogroup would not be pleased.