GBP and Euro Steady As Fed Meeting Draws Close
The EURUSD was steady on Wednesday as it anticipates the US Federal Reserve monetary policy decision, while adjustments to the BoJ monetary policy meant the Yen was in a volatile state on morning trading.
There is a strong sense of anxiety around the markets today, not only in Foreign Exchange but also stocks and commodities.
It’s no surprise that traders are watching closely the decision by the Fed, whose monetary policy committee (FOMC) will announce at 1800 GMT if it leaves rates unchanged, following two days of meetings.
It seems that a rate hike this Wednesday is unlikely, as far as analysts are forecasting, but have queries about a future increase, perhaps at the December meeting.
The Fed President Janet Yellen will talk at 18:30GMT at the usual press conference, with many traders on the lookout for the slightest clue for the future on US monetary policy .
Often a rate hike will make the dollar stronger and therefore more attractive to traders. In reverse, signs of caution tends to weigh on the dollar and push its value down.
Not to be left out, the Bank of Japan (BoJ) announced Wednesday a series of adjustments to bring more flexibility to its monetary policy, which has failed for now to achieve the inflation target 2% three years after the launch of a major offensive.
The Japanese central bank also kept negative interest rates unchanged at -0.1%.
The BoJ continues its massive injections of liquidity into the monetary system, to find thereafter a balance.
In morning trading the British pound was steady against the euro at 85.86, versus the dollar at 1.2984, after hitting a new low since mid-August. The British Pound is weighted by the ever-present possibility of a further decline in interest rates in the UK before the end of the year.