FOMC’s Impact on U.S. Dollar

The outcome of Wednesday’s Federal Reserve meeting is expected to set the tone for trade in the U.S. dollar heading into 2014, whatever decision is reached on the highly-anticipated tapering of monetary stimulus.

Contrary to expectations, the dollar has not seen a broad-based surge even as market expectations for when Fed tapering will begin have been bought forward in the face of upbeat economic data.

While the dollar hit a five-year high against the yen last week, it has weakened almost 8 percent against the euro in the past three months. The dollar index, which measures the greenback’s value against a basket of other major currencies, is hovering around 80.04 – not far from where it ended last year.


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