Review of Federal Open Market Committee Meeting Minutes

ForexNewsNow | Published on October 12, 2010 at 6:47 pm

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Federal Reserve Open Market Committee MeetingNEW YORK (Forex News Now) – In forex trading news today, the release of the minutes from the latest meeting of the Federal Open Market Committee – the body within the Federal Reserve tasked with controlling American monetary policy – sent the dollar down versus the euro, suggesting that further losses are in store for the currency.

In the minutes released today, members of the FOMC felt that the American economy would probably be in need of further quantitative easing measures in the near future.  Investors eyeing the comments took the statements to mean that more stimulus will be announced, probably as soon as the meeting in November, and sold the dollar accordingly.

Quantitative easing measures are designed to essentially expand the supply of money in circulation as a means of stimulating the economy and are widely viewed as damaging to the value of a currency.

Analysts were quick to comment on the importance of the forex trading news.  Nick Bennenbroek, head of forex strategy at Wells Fargo, stated, “The comments support and reinforce the view that there will be Fed policy action at the November meeting. This seems to be the consensus now and so we’re seeing the euro gaining against the dollar.”

In trading today, the euro gained 0.33% against the dollar, climbing to 1.3917 and reversing an earlier slide that momentarily halted the streak of strong performances against the American currency.

Bennenbroek further commented that the expectations for the announcement and QE measures has already been priced into the market to some extent, which has limited some of the upside potential for the euro in this latest movement.

He predicts, though, that systemic weakness will continue to undermine the dollar in the near term.

A look to the future for forex trading news reveals that the market expects a QE package of anywhere from $500 billion to $1.5 trillion to be pumped into the economy.  The next meeting of the FOMC is on November 3rd, which could see a substantial drop in the value of the dollar against most major pairs.

Japan is also poised to act once more in the markets to arrest the slide of USD/JPY.  If they move, it will be before the dollar reaches the 79.75 mark against the yen, its all time low.  Such a move will likely help the dollar maintain some kind of strength against the yen but will likely do nothing to help it against the euro.

The news announced today that the European Central Bank is planning on withdrawing QE funds it has allocated will further contribute to continued gains in EUR/USD.

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