Currency market waits for rates clues from Fed

Currency market waits for rates clues from Fed


The dollar fell against a basket of 6 major currencies on Tuesday as investors await the Federal Reserve meeting, which is expected to announce the start reduction of the $4.2 trillion in bonds. The tightening of the Fed’s monetary policy did not stop the fall of the dollar this year, as other major central banks are considering steps to stop stimulus or raise interest rates. Most analysts expect a decline in monthly bond purchases, but also a loophole for interest rate hikes in December.

“If we move closer to a U.S. rate hike, that should come along with a bit more dollar strength and euro weakness which would harden the ECB’s exit case and be a headwind for government bonds,” said Commerzbank strategist Rainer Guntermann.

The green money fell 0.25 percent to 91.81 points. This was close to the 2-year low of 91.01 points recorded on September 8. Futures trading gives slightly greater chances for interest rate increases in September than two weeks ago, with futures positions now showing a 58% probability of raising the key interest rate. Donald Trump’s speech to the UN was not economic, but its influence was felt in the USD/JPY exchange rate. Investors’ fear of further escalating tensions between the US and North Korea led to a fall of around 0.1% to 111.64 yen per dollar.

Speculation about the possible future withdrawal of incentives from the ECB brought a volatile session for the euro. A weekly peak against the dollar was reached at $1.2005 per euro.

Gold recorded a calm session on Tuesday as volumes were lower than the average. The price declined by 3.6% on Sept. 8, when the annual peak of $1,357.54 was hit. The same day the dollar reached its lowest level against the basket of currencies for the past two and a half years. Tensions around North Korea still play a key role in the price of precious metal, but Trump’s speech to the UN has not affected the price. For the day, spot price rose by 0.21% to $1309.32 an ounce. The futures contract price in December dropped by about 20 cents to $1 310.6 per troy ounce.

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I handle much of news coverage for tech stocks, and occasionally cover companies in different sectors. In the past, I've written for other financial sites and published independent investment research, primarily on tech companies. I have a B.A. in Economics from Columbia University. I'm based out of San Diego, but grew up in Southern New Jersey. I play basketball and tennis in my spare time, am a long-time (and long-suffering) fan of Philadelphia's sports teams, and alternate daily between using an iPad Air, a Galaxy Note 3, and one or two Windows PCs.