This week’s minutes of the last Federal Reserve’s meeting spurred risk aversion on the Forex market, driving the US dollar upward. Yet some currencies held ground against the greenback quite well, most notably the Japanese yen and the Australian dollar.
The beginning of the week did not foretell anything special for dollar and the currency was slowly going down as the positive market sentiment was eroding the appeal of the greenback. The Fed’s minutes were not expected to change the situation on the FX market, but in fact they became the major event of the week. Traders decided that the comment about varying pace of asset purchases signaled withdrawal of stimulus by the Fed. Some analysts thought that the resulting surge of the US currency was an overreaction as the minutes did not show anything really new. Indeed, the rally slowed on the very next day and the dollar started to move down against many currencies yet again. The poor fundamental reports added to risk aversion, bolstering USD further. In the longer run the unfavorable data is bearish for USD as it means the US central bank will have no reason to end the accommodative policy.
AUD managed to jump by the end of the week versus USD after the comments of Reserve Bank of Australia Governor Glenn Stevens. The gains of JPY are harder to explain as the currency was weakening on prospects of yet another intervention, yet the yen managed to outperform the dollar.
EUR/USD dropped from 1.3347 to 1.3186 this week. GBP/USD declined from 1.5503 to 1.5246 and its weekly low of 1.5128 was the lowest price since July 2010. USD/JPY ticked down 93.65 to 93.42. AUD/USD was up from 1.0289 to 1.0328.
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