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US Dollar weakens before FED meetings

Written by on July 28, 2014

US economy failed to rebound in the second quarter of 2014 as much as investors expected and the American currency declined against Euro for the first time during the last seven days.

Tomorrow FED will begin meetings to debates the interest rates pace and if the Government is going to reduce further its bond purchase monthly amount.

Investors and analysts expect the rebound to be weaker than expected, and as Vassili Serebriakov, a foreign-exchange strategist as BNP Paribas SA, said: ‘It’s probably going to weigh on the dollar if it (rebound) disappoints.’

Bloomberg Dollar Spot Index, which tracks US dollar against 10 major currencies, reached 1 014.21 last week and rised until 1 014.39 – its monthly high since June 18th.

On August 1st, Labour Department of US is going to announce non farm payrolls data for July 2014 and the figure is expected to reach 231 000 according to the currency forecasts. If the actual number is close, it would be a six months straight up line in non farm payrolls results in the US economy, consequently, it is expected to give the major strength in the currency after this Friday.

Petr Krpata, a foreign-exchange strategist at ING Groep NV in London, said that a divergence in monetary policy is foreseen. According to the analysts, short-term US yields will rise and this should be positive for the american currency.



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