Talking Points:
US Dollar rallies mid-week on FOMC minutes and Bullard
Greenback traders may have different expectations for the December Fed meeting
A look back at the past week of Forex trading using movements in the US Dollar Index:
US Dollar 1-Hour 17:00 11/17 to 12:00 11/22 EST
Want to trade with proprietary strategies developed by FXCM? Find out how here.
The Dow Jones FXCM US Dollar Index saw a mid-week rally as comments from the Federal Reserve seemed to have raised traders’ expectations for the possibility of a taper of quantitative easing in the December meeting.
On Monday and Tuesday, the dollar slowly declined to new weekly lows on a mix of economic data, and then on the announcement that the PBOC will loosen Yuan intervention.
Between Tuesday and Wednesday, the US Dollar hit the low of the week on Fed Chief Bernanke’s comments that there might be a delay between the end of quantitative easing and the first rate hike.
However, the greenback losses on those comments were reversed on Wednesday morning, when Bloomberg reported that the ECB is considering cutting the deposit rate to -0.10%. Then, FOMC member Bullard said that a taper of QE is still on the table for December, which sent the US Dollar even higher.
Finally, the minutes from the last FOMC meeting said that the Fed will likely taper in the coming months on better data. The US Dollar not only rallied a bit in the hour after the release, but the greenback continued to take gains in the Asian market hours on dollar bullishness.
Today, the US Dollar continued to rally and came just two points short of setting a new 2-month high.
New to Forex? Watch this video
Charts created by Benjamin Spier using Marketscope 2.0
— Written by Benjamin Spier, DailyFX Research. Feedback can be sent to bbspier@fxcm.com .
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.Learn forex trading with a free practice account and trading charts from FXCM.
Source: Daily fx
