FX-MM : “Weakness in the Greenback Ahead of FED Meeting”

Currencies Direct September 20th 2010 - 2 minute read

FX-MM : “Weakness in the Greenback Ahead of FED Meeting”

The dollar has fallen towards a five-week low against the euro
before a report today that may show that the U.S. housing market remains weak,
adding to evidence that the world’s largest economy is slowing. The U.S. currency
weakened versus 12 of its 16 major counterparts on speculation that the Federal
Reserve’s Open Market Committee will also confirm that it is considering
further measures to keep borrowing costs low at their meeting tomorrow.

In the U.K, data released this morning has revealed that home sellers lowered
asking prices for a third month in September, wiping out half of the gains made
since the start of 2010. Average asking prices in England
and Wales fell 1.1 percent
from the previous month and 3.4 percent over the last three months according to
Rightmove, the operator of Britain’s
biggest property website. A pickup in the supply of homes for sale is putting
downward pressure on prices, while curbs on lending by banks are crimping
demand. Bank of England
Governor Mervyn King noted last week that bank balance sheets “are not in
tremendously robust shape,” and that this may continue to restrain
lending.

The Australian dollar has increased towards a two-year high after central bank
Governor Glenn Stevens signalled earlier this morning that policy makers may
need to resume raising interest rates should a mining boom stoke the economy
next year and boost inflation. The currency has gained 6 percent so far this
month as traders increased their assessment of the chances that the Reserve
Bank of Australia
will increase their benchmark rate on 5th October to 29 per cent.

Today, the economic calendar is again very thin. In US, the NAHB housing market
index will be published whilst in the UK, M4 money supply data will be
released. Global factors will continue to guide the price action on markets so
market chatter on government finances of countries like Ireland and Portugal may continue to weigh on
sentiment.

Written by
Currencies Direct

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