Home » EUR » Currency Markets Range Bound Before Federal Announcement

Currency Markets Range Bound Before Federal Announcement

Currency markets are anticipating this afternoon’s federal announcement with a sense of trepidation. If there is an extension of easing then the impact on future currency movements will be profound.

Investors across the globe think that additional easing will weaken the dollar and impact upon any commodities denominated in the currency. Oil prices will soar above $100 a barrel and the cost of raw materials will also track higher. The Dollar has already broken parity with three of its counterparts this week. The Canadian Dollar, Swiss Franc and Australian Dollar have all managed to break that magic parity level this week.

The pound has given away most of the its early gains this weak when the ISM manufacturing figure posted lower than expected and the pound immediately plunged by 1% against the Euro and most other currencies. The only currency it managed to rise against was the beleaguered Dollar.

Australian Dollar bulls came out in force after they raised their key interest rate again driving the pound back below support at 1.600 GBP/AUD. Future currency expectations rely heavily on this afternoons federal release and any clients with large currency requirements going forward should certainly consider having stop orders in place to mitigate their currency risks.