Dollar Rises on Federal Reserve Decision and Obama Stimulus
January 29th, 2009 Posted in Analyst Picks
The Dollar rose against its major currency pairs yesterday, after the U.S. Federal Reserve decided to keep America’s interest rates unchanged at 0.25%. The Dollar’s behavior is also owed to the approval of President Obama’s stimulus by the U.S. House of Representatives yesterday. This therefore matches our prediction on the trend that the Dollar will take after the results of the vote, which can be seen in our ForexYard article, Obama Stimulus May Boost Dollar, which is on the ForexYard blog.
The Dollar has risen against the Yen by 50 pips so far today, which is considerable as there is usually low volatility between these 2 currencies, even after important news events. This just shows how important the Obama stimulus and the U.S. Federal Reserve’s decision is when it comes to forex. The Dollar also rose by over 55 pips vs. the EUR so far in today’s trading. This too is an important sign, considering the forex market has only been open for several hours.
Adding to the Dollar’s bullishness since late in yesterday’s trading was the statement by the Federal Open Market Committee (FOMC) of the U.S. Federal Reserve, which stated that the global economic crisis is likely to worsen in the coming months. Additionally, the FOMC hinted that more money is required to uplift the U.S. economy out of recession. This may therefore lead the European Central Bank (ECB) and the Bank of England (BoE) to cut the Euro-Zone and British interest rates more than forecasted, prior to yesterday’s news events in the U.S.
The Dollar is likely to remain bullish going into the middle of next week. Investors will need to wait until Wednesday to know about the ECB and BoE interest rate decisions. In the meantime, however, expect high volatility between the Dollar and its major currency pairs. If you want to learn more about the forex market and start trading on the foreign exchange within minutes, then visit ForexYard and open an account. Start making profits today!
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Tags: Bank of England, BoE, British Interest Rates, dollar, Dollar bullishness, ECB, economic crisis, Euro-Zone, European Central Bank, Federal Open Market Committee, Federal Reserve, FOMC, Foreign Exchange, forex market, global economic crisis, Interest Rate decision, Obama Stimulus, President Obama
