FED Speculations Help Dollar’s Rally

The dollar started the week rallying versus most of the 16 main traded currencies in foreign-exchange markets, as speculations among traders suggest that the Federal Reserve will not extend the current economic stimulus programs, indicating that the economy is recovering, rising attractiveness for the greenback.
After breaking several record lows last week, the dollar rebounded yesterday when markets opened as speculations that Federal Reserve policy makers will shift their economic strategy considering the current recovery in the United States, raising confidence among traders that both the greenback and the U.S. economy are more solid and attractive bets in financial markets. A report of U.S. indicators is likely to boost confidence towards the greenback even further, and this morning, the U.S. dollar already touched a two-week high versus the weakened pound, since the Bank of England has been one of the most inefficient institutions regarding measures to stimulate a country’s economy.
Even if the dollar is climbing significantly, the current rise has a speculative characteristic as it is linked to what the Federal Reserve will state regarding the current economic outlook and forecasts for the wealthiest nation in the world. As optimism raises traders’ confidence, it is likely that the greenback will climb further, and it can be considered undervalued against some majors, specially the euro.
EUR/USD traded at 1.4656 as of 9:58 GMT from an opening rate of 1.4703 yesterday. GBP/USD traded at 1.6165 from 1.6241.

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