News Column

Dollar advances on Fed stimulus prospects

January 27, 2014

The U.S. dollar advanced against a basket of major currencies on Monday amid exceptions the Fed will announce another $10 billion stimulus cut during this week's meeting. Still, there are worries from emerging markets amid currency devaluations and political frictions which raised concerns that global recovery may falter this year. The focus this week will be on the two-day Fed meeting starting on Tuesday as shrewd investors know that this meeting would decide the pace at which the Fed would slash its monthly bond purchases. Data also will grab attention as the Fed would not rush in scaling back stimulus unless the economy is moving smoothly towards recovery. A report due later in the day may show that U.S. new home sales dropped 1.9 percent in December, following a 2.1 percent fall a month earlier. The dollar index, which tracks the dollar's movements versus a basket of major currencies, rose to 80.56 after hitting a high of 80.63. Against the yen, the dollar surged to take the pair higher to a peak of 102.92 after setting a low of 101.75. The EURUSD retreated for a second straight session to hover around 1.3663 despite a report showing that German business confidence edged up for a third straight month in January. The British pound, however, rose against the dollar, where the GBPUSD pair is currently trading around 1.6573 after opening today at 1.6500. Later in the week, A U.K. report may show that Britain grew 0.7 percent in the fourth quarter from 0.8 percent in the previous three months.

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Source: Financial Markets

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