FED Meeting – Will The Dollar Fall? | IFCM India
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FED Meeting – Will The Dollar Fall? - 11.12.2012

Concerns regarding Mario Monti’s retirement, which was announced by the prime minister on the last weekend, seem to be gradually fading. However, the yield of 10-years government bonds in Italy, reflecting investor confidence in the national fiscal system stability, rose sharply yesterday to 4.9%, although last week it was below 4.5% (see the chart).
Italy, 10-year bonds yield
Euro vs. US dollar has stabilized: today it is trading around 1.2950, although last Friday it fell down to a 2-week low at 1.2875. However, significant strengthening in the euro can be hardly expected – numerous various risk factors are limiting growth potential. First of all, weak economic growth forecasts and possible replications by the ECB in this regard, as well as uncertainty about Greek debt problem solution, the upcoming Monti’s retirement in Italy and a weak economic situation in Spain. Now investors are focused on the FED meeting. Tomorrow the FOMC will announce its decision on the interest rate and likely launch a new round of bond purchases. There are now more speculations about the size of purchases than about its launch. In this regard, the US dollar may come under pressure - the main reserve currency index is gradually approaching 80.00 again (see the chart).
US dollar index, daily chart
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