US dollar is weakening today as the Federal Reserve stands ready to implement more stimulus if it feels the economic situation warrants it. Even though some of the greenback’s earlier losses have been pared a little bit, euro is still stronger as the prospect of a weakening dollar becomes more realistic.
Greenback has turned lower, thanks to a combination of economic data, and the FOMC minutes. The minutes of the latest meeting, released yesterday, indicate that the Federal Reserve is ready to stimulate the economy further with asset purchases if the body feels that the economy isn’t recovering at a fast enough pace. Today’s initial jobless claims report shows an increase of 372,000 for the week ending August 18.
This news serves as an indication that the economy is far from robust, and many think that recent improvements just won’t be strong enough to stave off QE3. As a result, the US dollar is lower against the euro — even though problems in the eurozone persist. Greenback has pared some of its earlier losses, but for now dollar weakness could be likely for the near term.
At 13:21 GMT EUR/USD is up to 1.2546 from the open at 1.2529, but down from the earlier high of 1.2574. GBP/USD is a little lower at 1.5873, down from the open at 1.5880. USD/JPY is up to 78.6100 from the open at 78.5860.
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