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Dollar Rallies to New High Following Upbeat Fed Announcement

Discussion in 'Forex Daily News & Outlook' started by forextrends24, Jan 27, 2010.

  1. forextrends24

    forextrends24 New Member

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    Today’s sample of Forex Analysis from ForexHound.com

    The U.S. Dollar rallied to a new high for the year after the FOMC announcement offered an upbeat assessment of the economy.

    While just about everyone knew the Fed would keep interest rates unchanged at near 0% for a prolonged period of time, traders did take note of the change in its language when it said “the pace of economic activity is likely to be moderate for a time”. This was better news than the statement in December which read “economic activity is likely to remain weak for a time”. Traders responded to this good news by sending the Dollar to its highest level since September 2009.

    The Dollar also strengthened on the news that the Fed would end its mortgage buyback program as scheduled on March 31st. This news drove up short-term interest rates as traders assessed this action to mean the economy was improving enough to warrant a rate increase sometime after September. The FOMC did cover itself against future deterioration in the economy by saying that it “will continue to evaluate its purchases of securities in light of the evolving economic outlook”.

    Read full article at ForexHound.com as well more Forex Trading articles including Forex Technical Analysis and Forex Education

    Disclaimer: Trading foreign exchange on the margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore should not invest money that you cannot afford to lose.
     
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