Posted on March 18, 2015 by the XM Investment Research Desk at 8:12 am GMT
Foreign exchange markets were waiting for the statement and press conference from the all-important Federal Reserve meeting today and were therefore hesitant to push major pairs – especially dollar crosses – too far in one direction. The focus is on whether the Fed would drop its reference on being “patient” to raising interest rates, which would be a strong signal that the central bank is preparing to raise interest rates. The theme of monetary policy divergence between the United States and other developed economies is one that has driven the greenback sharply higher in recent months and is continuing to underpin US dollar strength.
The trade-weighted dollar index was at 99.60 – close to Friday’s multi-year high of 100.39.
Before the highlight of today which is the Fed statement and Janet Yellen’s press conference, there will be some important news out of the UK in terms of the country’s employment numbers for January / February and Bank of England minutes. Unemployment is expected to slightly dip to 5.6% from the previous period’s 5.7% mark, while the Bank of England’s Monetary Policy Committee was expected to be unanimous in holding interest rates steady. The pound has been under pressure lately; challenging the 1.47 level against the dollar as well as backing off from its recent highs against the euro as the Bank of England Governor appeared dovish with respect to raising interest rates. The announcement of the UK budget by Finance Minister George Osborne will also be an important event as it will be the final major economic policy proposal by the government ahead of May’s General Election.
Euro traders may also get some clues from a speech by Mario Draghi at the inauguration of the new premises of the ECB.