The Fed Makes the Forex Flutter

Share On Facebook
share on Linkedin
Print

What is it about the U.S. Federal Reserve Bank that makes the Forex system flutter like a young girls eyelashes when a good looking young man passes by?  I’m no Forex expert (thank you for reading anyway), but this monthly encounter between the world and Ben Bernanke is a lot like young love.  It has more to do with the overwhelming allure of anticipation than the disappointment of the actual encounter when and if it ever takes place.

Once again, the world waited for the Fed Head to pass by, in the hopes that he might smile or give some other indication of his intentions.  But, alas, he came as expected yesterday, but seemed either unable or unwilling to divulge whether or not he intends to take the world to the senior prom.

The minutes of the Fed’s July meeting were released yesterday.  Anticipation fueled speculation.  Then, when the report said nothing substantial regarding the Fed’s intention, miscalculation turned to reverberation as the world had to do something, even if the Fed had not.

I may not be an expert (But then again, who really is?), but I can see that currencies are fluctuating this morning as the world has returned to speculation.  The dollar has strengthened this morning against the pound (by 0.5%), the euro (0.28%), the yen (1.03%) and the Canadian dollar (0.27%) as the majority of the world seems to generally believe that the Fed will begin to loosen the chains on the U.S. economy to at least some extent in September, although it is evident that the entire Fed board is not fully supportive of the move.

The British pound has not fared so well today, losing ground versus the euro (0.21%), the Hong Kong dollar (0.48%), the Australian dollar (0.61%), the Singapore dollar (0.58), and the Brazilian real (0.69%), whilst gaining ground against the yen (0.48%) and the Swiss franc (0.06%)

In general, the dollar is continuing to strengthen against all major currencies, with what I see as a mild correction as the day comes to a close. The pound has weakening slightly across the board, with the general momentum continuing to be in that direction.

What does it mean?  I’ve already told you that I’m not an expert.  I don’t know.  But I have checked with some experts on the matter and I cannot find a consensus.    For instance, IHS Global Insight says that the Fed will probably not implement a tapering in September, but Barclays predicts that it will.

Mark Lehman of JMP Securities summed it up like I would, saying “People are not convinced about what to do, so you’re susceptible to big, intraday market swings.”

That kind of makes me sound more like an expert after all.

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

Leave A Reply

 
Do you want to write for our Newspaper? Get in touch: newspaper@advfn.com

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

P: V: D:20221202 17:39:40