Currencies, bonds, commodities – dollar weakens after Fed decision – economy

The reduction in securities purchases by the US Federal Reserve, in line with expectations, weakened the dollar somewhat on Wednesday. In return, the euro rose 0.3% to $ 1.1612. Monetary watchdogs around Fed Chairman Jerome Powell have decided to melt their securities purchases, which currently total $ 120 billion per month, starting in mid-November. This process, known in technical jargon as tapering, of gradually reducing the dose of silver injections launched during the corona pandemic, is expected to be completed in June next year. However, according to the US Federal Reserve, the time for interest rate hikes has not yet come. The prospect of continued low interest rates in the eurozone weighed on European government bond yields. The ten-year German government bond hit its lowest level in a month. The interest rate fell to minus 0.194 percent after minus 0.159 percent the day before. From the point of view of the President of the European Central Bank, Christine Lagarde, it is currently unlikely that an interest rate hike is expected next year.

Meanwhile, oil prices have fallen significantly. A barrel of North Sea Brent cost $ 81.33, 4% less than the day before. The API industry association previously reported a surprisingly large increase in US inventories over the past week.

Surprisingly strong job creation in the US private sector has increased the pressure on gold “anti-crisis currency”. The precious metal is 0.8% cheaper at $ 1,773 per troy ounce. Strong labor market numbers have fueled speculation about economic growth and profits for booming companies, said Naeem Aslam, analyst at brokerage firm Ava-Trade. This makes “safe havens” less attractive.

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