As policy makers from the U.S. Federal Reserve get ready to talk about another purchase of bonds, the greenback dropped in value against the yen, trading close to a week-low. This purchase would indicate that the Feds are willing to go above the $600 billion already decided in prior months. This of course kept the dollar’s exchange rate low versus its other counterparts.
However, the Yen also traded low against the Euro, in the face of a lower demand for Japan’s monetary unit and gains rendered by almost every global money market.
And as Tetsuya Inoue, a capital markets’ researcher in Tokyo stated, investors are keeping a close look on what’s going on in the United States to assess whether its economic recovery will be strong enough to drive up profits in a positive way. If the economy’s outlook really improves, he went on to say, U.S. profit seekers will put their money into overseas’ assets in hopes of bigger yields; and that, may prevent the Dollar’s recovery.
FX rates showed the U.S. currency traded at $1.3391 for a Euro, the weakest price since the first part of December.
Federal Reserve Chairman Ben S. Bernanke is of the opinion that more bonds should and can be purchased. However, Moody’s Investors Services, Inc. made a statement that the extension of the Bush-era tax cuts will most likely affect the country’s AAA credit rating for the coming years, unless some measure is put in place.
David Sumner is a freelance writer with a specialization in reporting on the world of finance. David holds a B.A. from the University of Maryland. Currently David is based in the U.S. but spends a good portion of the year traveling throughout Europe and Asia.
For the disclaimer please click here