The US dollar rallied against the euro and the Japanese yen yesterday as positive US fundamentals made investors less certain that the Federal Reserve would initiate the third round of quantitative easing. So far, the greenback managed to keep its gains today.
The Jackson Hole Symposium stars today and Forex market participants doubt whether Fed Chairman Ben Bernanke would announce QE3 during the meeting. US gross domestic product rose 1.7 percent in the second quarter of 2012, signaling that the US economy is still growing. Pending home sale grew 2.4 percent in July, while the expected rise was 1.1 percent. The Fed was watching the housing market closely to decide if easier policy is warranted. Improvement of the housing sector means there is less incentive for the US central bank to act.
Europe and Japan have their share of problems that put pressure their currencies. The US economy is not in a perfect shape, but at least it is better than Europe’s and Japan’s ones. The irony is that the good health of the US economy is not good for the US currency.
EUR/USD fell from 1.2564 to 1.2533 yesterday and traded at 1.2536 as of 1:36 GMT today. USD/JPY went up from 78.52 to 78.69 on the previous trading session and was near 78.66 on today’s session.
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