Today’s sample of Forex Analysis from ForexHound.com
The U.S. Dollar finished sharply lower today against most major currencies except the Japanese Yen. Speculators bet early and often this morning that the Fed would do nothing with interest rates nor hint at an end to its stimulus plans. These bets paid off as the Dollar weakened further after the FOMC announcement in the afternoon.
Demand for higher yielding assets was strong today and based on what the Fed said, bullish traders should have a free pass for the next thirty days. The key will be a follow-through rally tomorrow. If the Dollar does not follow-through to the downside tomorrow then nervous shorts are likely to cover their positions, much like the move last week following the GDP Report.
Today’s statement from the Fed was especially dovish. It appears the Fed is afraid it will spook the markets and the economy if it takes a more aggressive stance toward hiking interest rates. In its statement the Fed explained in greater detail than previous statements why it remains committed to lower interest rates. Basically, the gist of the statement is the economy is still fragile and operating at under capacity. This is leading to low inflation.
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Fed Remains Committed to Low Interest Rates
Posted - November 05 2009 : 00:57:38
