Yesterday marked the beginning of the Federal Reserve’s two-day policy meeting and while this took place, the U.S. Dollar weakened against most of its exchange peers following an increase in stocks and commodity prices. Economists believe that Chairman Bernanke may extend the stimulus program beyond this month.
The Euro gained against the U.S. currency and the Yen as investors speculated that Greek Prime Minister, George Papandreou, would obtain the confidence vote needed to secure the bailout package. The 17-nation currency remained on an upward trend despite reports from the International Monetary Fund indicating that Spain’s strides to repair its economy have not been sufficient.
On the economic front, the U.S. showed that its housing sector continues to struggle, as Existing Homes Sales dropped in May to the lowest level in six months. This announcement followed other metrics revealing that manufacturing fell in the Philadelphia and New York regions. Analysts predict that the FOMC will maintain the cost of borrowing money at zero to 0.25 percent, which is the same level it’s been at since December of 2008.
The Canadian Dollar also benefitted in the Forex market as a result of the increase in the price of commodities (mainly from crude oil). The currency traded higher than it had earlier this week against the U.S. monetary unit.
The Pound Sterling rose against the Euro as a Bank of England policy maker stated that the bank may consider further bond purchases in order to boost the ailing economy.