US Fed holds interest rate at 2.00%. US Dollar gains verse Yen, Euro, Pound in Forex Trading. | CountingPips Forex Blog

September 16, 2008 - Forex Economic News

US Fed holds interest rate at 2.00%. US Dollar gains verse Yen, Euro, Pound in Forex Trading.

The U.S. Federal Open Market Committee decided to leave its benchmark interest rate unchanged today at 2.00 percent despite the economic turmoil on Wall Street this week. The bankruptcy filing of Lehman Brothers, the sale of Merrill Lynch to Bank of America and financing troubles of insurance giant AIG raised speculation that the Fed might be inclined to reduce the interest rate. A rate reduction did not come to pass as the committee voted US Dollar mixed in forex trading unanimously(10-0) to hold the rate steady for the third meeting in a row. The FOMC last reduced the interest rate on April 30th and has reduced the rate seven times since September 2007.

The statement accompanying the rate decision summed up the economic obstacles the economy is facing, "Strains in financial markets have increased significantly and labor markets have weakened further. Economic growth appears to have slowed recently, partly reflecting a softening of household spending. Tight credit conditions, the ongoing housing contraction, and some slowing in export growth are likely to weigh on economic growth over the next few quarters."

The Fed statement also gave little hint on its next direction for interest rates as it said that the "downside risks to growth and the upside risks to inflation are both of significant concern" and that the "Committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability."

US Dollar gains verse Yen, Euro, Pound in Forex Trading.

The U.S. dollar has been mixed in forex trading against the major currencies today. The American currency has gained ground against the Japanese yen, European euro, British pound and Swiss franc while losing ground to the Australian dollar, Canadian dollar and the New Zealand dollar. The dollar reversed yesterday's fall against the Japanese yen to bring the USD/JPY currency pair to the 106.23 level in U.S. session trading before 5 pm ET after opening today at approximately 104.31 yen per dollar. Against the euro, the dollar is trading at 1.4154 dollars per euro and has gained ground by approximately 35-40 pips from the day's beginning while against the British pound, the dollar has gained approximately 30 pips so far today. The dollar has increased verses the Swiss franc today from today's opening at 1.1158 francs per dollar to trading at 1.1235 at time of writing. Elsewhere, the dollar has lost ground today to the Canadian loonie and trading at the exchange rate of 1.0673, the Australian Aussie which has increased to 0.8036 today after falling yesterday and the New Zealand kiwi which also fell yesterday and has reached 0.6637 dollars per kiwi.

USD/JPY Chart - The US Dollar rises vs. the Japanese yen today in forex trading after falling against the yen in yesterday's trading(Hourly Chart).

Today's Forex Chart

tags: interest rate, usd, forex trading, fomc, economy

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