Forex trading with easy-forex in the UK

The euro has slipped down against the dollar today (June 18th) as markets prepare for the outcome of the next Federal Reserve meeting.

Today’s Asian trade saw the euro selling at $1.3328, down 0.27 per cent, after stooping as low as $1.3326 during the session.

Forex traders are positioning themselves for the outcome of the Federal Reserve’s two-day policy meeting, which is due to begin later today. It remains to be seen whether the US central bank will agree to begin winding back its huge monetary easing programme, which has traditionally kept the dollar under pressure.

Last month, San Francisco Fed president John Williams said that if positive economic indicators continued the central bank could consider an early exit to the $85 billion-a-month bond-buying programme as early as this summer. Soon afterwards, Mr Bernanke himself told the US Joint Economic Committee that an end to the scheme could be on the horizon “within the next few meetings”.

But since then, a series of decidedly mixed data has cast doubt on the Fed’s position. Employment data from May failed to live up to expectations, while interest rate rises have put the US property market under strain.
In the past couple of weeks the dollar has eased against the euro and a basket of other currencies, though this is also partially down to volatility in Japanese stocks as the Bank of Japan’s own easing programme tightens its grip.

A continuing upwards trend pushed the yen to gain against most of its peers. The implied volatility for the Japanese currency is high, and upcoming data might keep it up.

The yen marched upwards against the U.S. dollar to ¥94.90. It gained 2.8% during last week, the best weekly performance since the beginning of 2010, and it even reached ¥93.80 last Thursday. According to Bank of Japan May 21-22 meeting minutes released to the public last Friday, a board member of the Central Bank said that a two-year limit should be imposed by the BoJ for monetary easing to assist in reducing volatility in the bond market. After the two-year period, according to the same board member’s comments, the easing should be reviewed with flexibility. Those comments, together with increasing pessimism that the Central Bank’s monetary easing measures are not sufficient, guided traders to hold back from investing in foreign assets and invest back into the yen.

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