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Dollar Soars, Euro Plunges as Fed Hikes Discount Rate

Discussion in 'Forex Daily News & Outlook' started by forextrends24, Feb 18, 2010.

  1. forextrends24

    forextrends24 New Member

    Mar 27, 2009
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    Today’s sample of Forex Analysis from ForexHound.com

    The U.S. Dollar is mounting a strong rally late in the trading session following news that the Fed is set to hike the discount rate 25 basis points to 75 basis points. While not actually beginning a tighter monetary policy, a hike in the borrowing rate charged to member banks is a sign that the Fed is getting ready to begin removing stimulus and raising other key interest rates. The Dollar is rallying because the rate hike tightens the interest rate differential between the U.S. and other foreign nations.

    On Thursday, the Dollar had a volatile trading session triggered by economic reports and rumors of intervention. The Greenback opened higher, driven by spillover from Wednesday’s strong U.S. economic data. Early during today’s session the Dollar got a boost from mixed economic news. The Producer Price Index was higher than expected, but weekly jobless claims rose. This was followed by a better than expected Leading Indicators report and Philadelphia Fed Survey.

    Initially, these reports supported the Dollar but a recovery in the equity markets encouraged speculators to demand more risk. This slowed down the upside momentum in the Dollar as intra-day profit-takers took over.

    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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