Short Term Stimulus Seen as Less Likely

Federal Reserve policy meeting minutes indicated that the central bank will not be increasing monetary stimulus soon. This decrease in prospective liquidity was followed by a dollar rally and a rise in the treasury yield. The Fed indicated that slower price growth or faltering economic expansion might prompt reassessment.

This is contrasted with continuing uncertainty regarding the European economy. Attention has been particularly focused on Spain, which just recorded the eighth month in a row of increasing unemployment. This has been accompanied by deep austerity measures. The ECB meets tomorrow to decide interest rates for the shared currency and Bloomberg-surveyed economists expect no change.

Source: Bloomberg

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Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.