USD Strong Against The Majors After QE3

on Sep 18, 2012
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The announcement of the third round of quantitative easing by the Fed had a positive effect on the nation’s currency, the Financial Times reported. The USD managed to stop its slide down and rose 0.1 percent after a four-month low. The expected cash infusion by the Fed managed to strengthen its positions against all the majors. Particularly impressive was USD performance against the Japanese yen, with a 0.4 percent increase to Y78.92. This is the strongest level of the US currency against the yen in more than a week.

The euro replicated the performance of the dollar against the Japanese currency, also rising 0.4 percent to Y103.82. Other positive news for the euro included the reaching of an annual high against the Swiss Franc and a four-month high against the dollar. However, the record level against the USD was only touched, as the US currency quickly restored its positions by the time of the London markets closing.

However, the euro is still vulnerable, analyst say. According to Citigroup “The downside risks for the euro remain firmly in place”. The euro will suffer from the situation in Spain and Italy and the delays from both countries in requesting a bailout.
But the biggest loser was the Japanese yen, which depreciated against both the euro and the dollar. In Japan there are already talks about the Bank of Japan following the example given by the Fed and taking measures towards easing monetary policy.
The British pound showed stable performance, outperforming both the euro and the dollar by 0.3 percent. It reached its highest level against the dollar since April, rising to $1.6273. The British currency was traded on the London markets at a €1.2397 for a pound.

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