Is the recent Fed action bad for the Dollar?
*Bloomberg, by Steve Johnson, August 9, 2006:
Dollar drifts lower amid US rate uncertainty
"The US dollar drifted lower on Wednesday as market attention turned to
the fate of the greenback if the Federal Reserve has, as many now
expect, reached he end of its tightening path.
The Fed brought its run of 17 straight rate rises to an end on Tuesday
when it opted to leave rates on hold at 5.25 per cent. The accompanying
statement was seen as broadly dovish, although there was enough wriggle
room for a further increase if deemed necessary.
However, with the pause widely expected, the dollar’s decline was
muted. The greenback slipped just 0.4 per cent from its level
immediately prior to the rate decision to $1.2886 to the euro, 0.3 per
cent to SFr1.2227, against the Swiss franc and 0.1 per cent to $1.9087
against sterling, although it held steady at Y115.13 to the yen.
“The end of the Fed’s tightening cycle has been greeted with a
whimper,” said Steve Pearson, chief currency strategist at HBOS.
Derek Halpenny, senior currency economist at Bank of Tokyo-Mitsubishi
UFJ, attributed the dollar’s resilience to the fact that most
speculative traders were already short-dollars in expectation of a
pause. "
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
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