Wednesday, 16 Feb 2011

Dollar Weakens Following Fed Meeting Minutes

Near the close of the New York trading session the dollar was down following the Fed's improved forecast for the US economy.

The Federal Reserve released its meeting minutes from the latest Open Market Committee meeting which showed the Fed's upgraded view of the US economy.

As the Fed's meeting minutes were read, the dollar continued to decline with the largest gains against the greenback coming from the euro and the Canadian dollar.

At the close of the New York trading session, the EUR/USD was trading at 1.3565 after opening the day at 1.3529. The USD/CAD was down at 0.9850 from 0.9879. The Swiss franc was stronger with the USD/CHF closing below the 0.9600 level after opening at 0.9646.

One of the largest movers on the day was the pound following inflationary data and BOE Governor Mervyn King's statements that lowered market expectations for a near term rate increase. The GBP/USD was down at 1.6090 from 1.6158.

Tomorrow traders will focus on a slew of US data set to be released. US Core CPI, weekly unemployment claims, and the Philly Fed Manufacturing Index are all due. Federal Reserve Chairman Ben Bernanke will also testify before the Senate Banking Committee.

Despite today's gains in the value of the EUR/USD, the current bearish trend looks to remain with support for the pair falling at Monday's low of 1.3430, followed by the rising trend line from the June 2010 lows at 1.3050. Resistance comes in at 1.3610 from the falling trend line off of the February highs as well as last week's high of 1.3740.