Forex market waiting for Fed announcement

Published: 16 Dec at 8 AM Tags: Euro, Dollar,

All eyes this week are on the policy meeting at the US Federal Reserve due to take place tomorrow and Wednesday. Investors are watching closely to see if the central bank will finally announce that it is to taper its massive bond buying programme. It is still anyone’s guess as to whether Fed chief Ben Bernanke will announce a reining in of quantitative easing.

Although the recent budget deal has reduced the fiscal risk and job figures are looking strong it still might not be enough for the Fed to announce tapering. Inflation is still low and Bernanke may need more persuading that the US economy is back on track than recent job statistics and spending gains.

The euro has retreated slightly from last week’s high of $1.3811 to settle at $1.3736. After rising at the end of last week on the back of expectations that the Fed will announce tapering the dollar index is steady at 80.195.

The dollar is currently down slightly to 103.11 yen after hitting just under 104 yen on Friday. The euro is worth 141.58 yen after last week’s high of 142.82 yen. Most investors believe the Bank of Japan will maintain its easy money policy at a meeting set for Thursday and Friday.

Elsewhere the Australian dollar has picked up a tad from Friday’s $0.8909 to $0.8955.