US policy makers are trying to downplay expectations of stimulus reductions that spurred risk aversion on the Forex market. Such attempts weakened the US dollar against some currencies, including the euro, but the greenback retain strength versus some other majors like the Great Britain pound and the yen.
Yesterday, Jeffrey Lacker, the President of the Federal Reserve Bank of Richmond said:
Markets got a little bit ahead of us in terms of what they were expecting, by way of how long these purchases would continue, and I think they’ve gotten into better alignment now with the committee’s expectation.
Minneapolis Fed President Narayana Kocherlakota voiced opinion that the market reaction was “more outsized than I would have anticipated personally”. New York Fed President William Dudley added today that trimming of quantitative easing is “very likely to be a long way off” and noted about speculations about QE end:
Such an expectation would be quite out of sync with both FOMC statements and the expectations of most FOMC participants.
Such comments slowed the dollar’s rally, but did not break it outright as the losses are far smaller than the previous gains so far.
EUR/USD rallied from 1.3009 to 1.3035 as of 21:09 GMT today. At the same time, GBP/USD declined from 1.5309 to 1.5254 and USD/JPY rose from 97.72 to 98.34 after three session of sideway trading.
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