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Fed May Buy Fewer Bonds — Dollar Gains

October 27, 2010 at 19:56 by Vladimir Vyun

US DollarThe US dollar climbed today against all other major currencies on the speculation that the bonds purchases by the Federal Reserve would be less extensive than anticipated.

The moves of the dollar recently were very strongly tied to the talks about the quantitative easing. The easing was priced in the weaker dollar, so any signs of less stimulus being added by the Fed make the dollar stronger. The good macroeconomic reports from the US add to the speculation that the quantitative easing would be rather modest.

The Standard & Poor’s 500 Index fell 0.9 percent, while the MSCI World Index of shares slumped as much as 1.1 percent. The yield on the Treasury notes, maturing in 10 years, rose 4 basis points to 2.69 percent.

EUR/USD fell today for a second day, dropping from 1.3859 to 1.3745 as of 17:57 GMT. GBP/USD went down from 1.5943 to 1.5739. USD/JPY advanced from 81.40 to 81.70, following the increase to 81.98.

If you have any questions, comments, or opinions regarding the US Dollar, feel free to post them using the commentary form below.

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