The dollar remained lower against the yen and euro amid speculation that the Federal Reserve will expand monetary stimulus at a two-day meeting starting today.
Demand for the relative safety of the world’s reserve currency was also limited as investors weighed prospects for a U.S. budget deal. The 17-nation euro traded near a two-week low versus the yen before a German survey of investor confidence today forecast to show a negative index figure for a seventh- consecutive month. European Union heads of government will hold a summit on Dec. 13-14 in Brussels.
“It’s almost certain the Fed will announce that they are going to start buying Treasuries outright once Operation Twist ends,” Ray Attrill, Sydney-based global co-head of currency strategy at National Australia Bank Ltd., said in reference to the central bank program of of swapping $45 billion a month in short-term Treasuries for long-term debt. “I suspect there will be a dollar-negative knee-jerk reaction.”
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.