FED Changes Its Tune – USD Exchange Rates

Last night the Federal Reserve Bank of America announced its latest set of minutes from the previous interest rate decision and contrary to previous comments from FED Chairman Bem Bernanke they mentioned that their Quantitative Easing (QE) programme would continue. Last month, in what was quite a surprise announcement, the FED mentioned they would consider tapering down their QE programme as long as the US economy continued to perform well. The date for the commencement of tapering down the QE was later this year and so many analysts understandably took this announcement to mean the decision had already been made. However, the resulting market turbulance has meant that Bernanke had to step in and assure the markets that the end to QE was by no means a done deal and now these minutes sem to have confirmed this.

The fact that the FED have used this opportunity to calm the markets has meant that we have seen some Dollar strength over night meaning there are some excellent opportunities for clients looking to sell Dollars but is not such good news for those clients looking to buy USD as this news has made it more expensive. I still believe the US will start tapering down QE but will have learnt what sort of impact in can have and will therefore have to ensure that it is both very gradual but also that the markets are well prepared and do not get overly nervous when it is announced as it could lead to yet more volatility in the markets, something the FED will want to try and avoid.

If you need to buy Dollars make sure you contact one of our senior currency brokers who will be more than happy to assist. You can call us on 01494 725353.

Japanese Economy Recovering

The Bank of Japan (BOJ) stated last night that their economy is starting to recover albeit slowly. Japan is one of the largest economies in the world and has for many years struggled to produce any growth however a huge stimulus package and a new BoJ Governor have clearly started to have a positive effect which is not only good news for Japan but also for the global economy. For the global economy to improve and in order to see an improvement in economies such as the EU it will be key that the largest regions such as the US and Japan show solid growth which means this news this morning is positive for many currencies.

With the currency markets still remaining very volatile it is important for all clients to stay in close contact with their currency broker as we have seen recently large market movements take place with very little warning which again we saw last night with the USD. So, if you would like to discuss your currency transfer then please do not hesitate to call us or alternatively email me on trh@currencies.co.uk