Wednesday, 11 Aug 2010

Forex News: USD Rising after Fed Declares Policy Shift

The US dollar (USD) hovered close to a 15-year low against the Japanese yen today, but rose against other currencies. This has happened as investors pared back risk exposure in the wake of steps announced by the Federal Reserve to boost the economy over the short- and long-term.

The Fed has stated that it will use cash from maturing mortgage bonds which it holds in order to buy more US government debt, marking a policy shift away from a central bank which only a few months ago debated how to start exiting monetary stimulus.

Investors were also concerned by what the Fed's move said about a faltering economic recovery, driving global stocks lower along with perceived riskier currencies, which helps explain the sudden decline in the European and Asian based currencies yesterday and today.