The British pound reached a five year low against the dollar on Wednesday after the Bank of England warned about the effect on the country’s inflation of a general strengthening of the sterling. EU officials warned Greece against “unilateral moves” ahead of the Thursday EU Summit. Greece pushed through a “humanitarian crisis” bill, while the German Finance minister notes that time is running out for Greece.
Both the Australian and New Zealand dollars were boosted after the FOMC. AUDUSD was up 2% at one point, and the New Zealand dollar gained further ground after New Zealand’s GDP data came out with a strong reading of 0.8% growth. Coming up at the end of the week, RBA Governor Stevens will speak at the American Chamber of Commerce in Melbourne, at 02:10 GMT on Friday.
The Federal Reserve opened the doors on Wednesday for a possible rate hike for the first time since 2006 but downgraded the economic outlook and inflation projections. The reference of being “patient” on rates was removed from the policy statement, signaling a coming up rate increase but at the same time being cautious about economic recovery. The Fed’s comments sent the US dollar down to its biggest daily drop against the euro in the last six years. On the contrary, as the dollar was falling, gold reached a two-week high of $1177.56.