U.S. dollar showing mixed results after Fed announcement

NEW YORK (Forex News Now) – The U.S. dollar is showing mixed results after the Federal Reserve has announced that they will be purchasing $600 billion in assets to help stimulate the U.S. economy, as the recovery has been “disappointingly slow” according to the Federal Reserve.

As we look around the various currency pairs, FX rates have jumped against the USD initially, but were quickly beaten back, as traders will have to decide on the appropriate FX rate for the USD as the $600 billion in stimulus was actually on the low end of the estimated spectrum.

While the Federal Reserve is willing to buy $600 billion in new assets, such as Treasuries, it should be noted that only $250-$300 billion of its expiring assets will be re-invested. In trading against the Swiss franc, the dollar fell quickly to the .97 handle. However, it’s snap back to the pre-announcement levels (0.9770) has been quick and violent.

The FX rate for the USD/JPY pair has been all over the place, as traders have to decide what effect this could possibly have on the world’s stock markets. (As the Dollar – Yen tends to show the flow of money into stocks world wide.)

Similarly, the GBP/USD pair has done almost nothing, except to maybe shake out short-term traders. The pair is presently showing a slight upside bias, but it must be said that almost an hour later, the pair has only held onto a 40 pip gain.