The U.S. Dollar rallied against the Euro and the Yen as the two-day policy meeting concluded with the Fed Chairman, Ben Bernanke, announcing that the central bank will only increase stimuli, if necessary, in order to bolster the economy and boost the employment sector. Mr. Bernanke went on to state that the Fed will keep an eye on economic data, set to be released over the next two months, in order to decide whether further accommodation are needed. The central bank confirmed it will continue “operation twist” which entails swapping short-term debt for longer term assets. In addition, the Fed left interest rates extreme low and indicated it would not warrant changes until 2014. Meanwhile, manufacturing declined in the U.S., though employment in the private sector rose more than expected.
In the Forex exchange, the British Pound dropped to a two-week low against the Euro following the release of industry reports revealing that factory output contracted the most in three years. This added to the belief that the U.K.’s recession has worsened. The Sterling also declined against the remainder of its Forex peers on indications that home prices sustained the biggest annual drop since August 2009.
The Euro currency traded slightly lower against the U.S. Dollar on optimism the European Central Bank will devise a solution in order to prevent Italian and Spanish borrowing costs from increasing further. This occurred after the bank’s President, Mario Draghi, suggested that policy makers are ready to do “whatever it takes” to stem the debt crisis.