US Fed keeps rate unchanged at 2%, Dollar gains in Forex Markets. | CountingPips Forex & Currency Trading Blog

August 5, 2008 - Forex Economic News

US Fed keeps rate unchanged at 2%, Dollar gains in Forex Markets.

The U.S. Federal Open Market Committee kept its benchmark interest rate unchanged today at 2.00 percent as expected. The FOMC voting was 10-1 in favor of no change in rate with Richard W. Fisher being the lone dissenting vote as Fisher was in favor of a rate increase. The FOMC has reduced the interest rate seven times since September 2007 but has held the rate steady since a reduction of 25 basis points in April of this year.

The statement accompanying the rate decision took a less hawkish tone on inflation this month in comparison to the June meeting as the committee expects "inflation to moderate later this year and next year". Energy prices have eased somewhat lately and the GDP grew US holds interest rate steady. 1.9 percent in the 2nd quarter but job losses and the housing contraction have continued to be sources of concern. The statement said that, "economic activity expanded in the second quarter, partly reflecting growth in consumer spending and exports. However, labor markets have softened further and financial markets remain under considerable stress. Tight credit conditions, the ongoing housing contraction, and elevated energy prices are likely to weigh on economic growth over the next few quarters. Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth."

The dollar has continued to show strength today against many of the major currencies in forex trading after the rate announcement. The dollar has gained against the euro today as the EUR/USD pair touched below 1.5450 before trading around 1.5470 later in the afternoon of the U.S. trading session. The dollar has closed higher against the euro for three straight weeks and is off to a good start this week to make it four in a row. Today's trading has also shown gains for the U.S. dollar against the Australian dollar, Canadian dollar, Swiss franc and British pound while being almost unchanged verses the Japanese yen.

USD/CAD Chart - The U.S. dollar gains againt the Canadian dollar today in forex trading(4H chart).

Forex Chart

tags: usd, interest rate, US fed, forex market trading

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