Important Announcements at Upcoming Policy Meeting
On September 17th a monetary policy meeting is slated to be held by the Federal Reserve Bank where a further $10 billion will be cut from the quantitative easing program. This will reduce the bond-buying program to $15 billion which will likely cease in October 2014. Analysts across the board are expecting the Fed to increase short-term benchmark interest rates from their historically low rates of 0% – 0.25%. The last increase in these rates was 8 years ago. While no indication has yet been given by Fed Chair Janet Yellen about the pace or size of interest rate increases, this information is likely to be revealed at the next meeting. The US recovery has gained ground while other important economic regions have fallen flat, including Japan and most of Europe.
In light of recent policy decisions by the ECB, the euro continues to weaken against the dollar. It is presently trading at 1.2901 which was a slight bounce back from the 1.2850 support level. Analysts do not expect the euro to trade much higher than the 1.30 level in the short term as the fundamentals are against such movements. The GBP/USD currency pair is also subject to bearish sentiment as the greenback hit 9 month highs against the sterling. The pair is currently trading at $1.61.