Wednesday, 24 Jun 2009

Greenback Rises After Fed Statement

After concluding a two-day meeting on Wednesday, the Federal Reserve held its monetary policy steady and said the U.S. economic recession was easing. With the Interest Rates virtually at zero, the Fed has focused on driving down other borrowing costs by buying mortgage-related debt and U.S. government bonds

The U.S currency reacted by rising against the Yen for the first time in 4 days and advancing versus the EUR after the Federal Reserve left its $1.75 trillion bond-purchase program unchanged. The Fed stayed the course on Interest Rates and Treasury purchases, as expected. The Fed highlighted rising energy and commodity prices, and said that the downturn is slowing and deflation is no longer a big threat. The Fed's announcement came out exactly as the markets expected it to. It was certainly more subtle than many had hoped for but nonetheless delivered a clear message that inflation and the economy will remain subdued for some time, analysts said.