THE TAKEAWAY: The US Dollar Index ended the week on a higher note as the Pound fell on the BOE’s outlook and the FOMC minutes discussed tapering quantitative easing.
US Markets were closed on Monday of this week as Americans celebrated Presidents Day which saw little movement in the US Dollar. When markets opened on Tuesday, investors eyed the Bank of England Monetary Policy Committee’s minutes which saw Mervyn King and Paul Fisher join David Miles in calling for an additional £25 billion of asset purchases. This saw the Pound fall sharply and the start of a rally for the Dollar going into the release of the FOMC minutes.
The Greenback strengthened further still as the Federal Open Market Committee released minutes which saw several members of the committee call for a tapering of quantitative easing measures. After consolidating some of its sharp gains, the Dollar trended lower then fell sharply as positive economic data was released causing investors to take their money out of the safe asset and into riskier instruments.
A further decline was seen in the safe haven currency as the RBA’s governor Glenn Stevens said that it was still prudent to hold interest rates in Australia at the current level which saw the so called ‘Aussie’ rally as yield worries abated.
US Dollar Ends Week Higher After FOMC Minutes and BOE Outlook
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