Euro Gains Slightly in Advance of Fed Statement
The US dollar fell slightly against the euro in advance of the results of the FOMC meeting. The dollar is still holding near a 2 ½ month high against the euro. Investors are waiting to see if the data from the FOMC meeting will offer any clue as to when the Federal Reserve may raise rates and withdraw various emergency measures. The euro was up 0.3% on the day at $1.4577 after hitting session peaks of $1.4587. Brian Dolan of Forex.com stated, “Stocks are up, the U.S. data was a bit on the risk-positive side and gold has pressed higher, so the dollar’s taking a bit of a breather. Also, we’re looking for a benign statement form the Fed, with rates on hold and no significant changes, and that should be good for risk appetite.”
Euro Pressured by Banking Concerns, Greek Downgrade
The euro has been widely pressured by banking concerns, the Greek downgrade and a downgrade in the Spanish debt rating. Austria nationalized one financial institution and put the nation’s largest cooperative bank on a watchlist. A spokesman for the bank said that the bank is not at risk of nationalization. The Aussie dollar fell after data showed that Australia’s gross domestic product grew by only 0.2% during the third quarter, much less than expected. The Aussie fell 0.7% on the day against the greenback trading at $0.8991, the lowest in three weeks. Tsutomu Soma of Okasan Securities stated, “Weaker-than-expected growth data as well as comments from a top central banker have curbed bullish views towards the Australian dollar a little. Players, including Japanese institutional and individual investors, sold the Aussie to trim long positions in Australian assets.”
Fed Upbeat About Recovery
The Fed has said repeatedly that rates are likely to remain low for an “extended period.”. Most experts believe that while rates will remain low the Fed will be upbeat about recovery prospects. According to a UBS analyst, “There could be more constructive language on the business outlook in the last FOMC meeting (of the year) but we don’t think they will ease off of the lower-for-longer stance.”
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