US Dollar Drops, Even With Taper Speculation

The US dollar is heading lower today, dropping even though there is speculation that the Federal Reserve will announce the beginning of its taper this week. The thought of low interest rates and the fact that the US economy might not be quite ready for taper are weighing on the greenback right now.

Members of the FOMC at the Federal Reserve plan to have their last two-day meeting of the year this week. Many expect that the beginning of the taper will be announced at this time. However, instead of prompting the gains by the US dollar, the news has been met with a lower greenback.

Part of the reason for continued dollar weakness, even with this speculation, is the expectation that interest rates will remain between 0 and 0.25 per cent through next year. Additionally, there are some concerns that the US economy isn’t recovered quite enough to handle the taper. Dollar weakness is seen going forward, and that is impacting the greenback today.

At 14:14 GMT the US dollar index is down to 80.0520 from the open at 80.1980. EUR/USD is up to 1.3771 from the open at 1.3732. GBP/USD is also higher, moving up to 1.6312 from the open at 1.6293. USD/JPY is lower, dropping to 103.0625 from the open at 103.2850.

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