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Dollar Rises on Fed Optimism

January 27, 2010 by

The euro traded for the first time in 2010 below $1.40 as the Federal Reserve stated on its interest rates decision report today that the multiple economic sectors are improving in the U.S., and economic stimulus used to help the country to emerge from last year crisis will start to be lifted, helping the greenback to gain and bringing risk appetite back to financial markets. EUR/USD falls at the moment, trading at 1.4015.

New Home Sales declined to 342k in December from a previously seasonally annual rate of 370k in November (revised). Actual figures were above forecasts for this real estate report, expecting 372k new home sales last month.

U.S. crude oil inventories decreased by 3.9 million barrels from the previous week.Total motor gasoline inventories increased by 2.0 million barrels last week. Both remained above the upper limit of the average range.

FOMC released its monetary policy statement today, in which interest rates remained unchanged between 0 and 0.25% as most analysts expected. Several stimulus used by the Fed to accelerate the economic recovery in the country will expire, as the economy is already showing signs of improved as policy makers stated:

In light of improved functioning of financial markets, the Federal Reserve will be closing the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, the Commercial Paper Funding Facility, the Primary Dealer Credit Facility, and the Term Securities Lending Facility on February 1, as previously announced. In addition, the temporary liquidity swap arrangements between the Federal Reserve and other central banks will expire on February 1.

If you have any comments on the recent EUR/USD action, please, reply using the form below.

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