Federal Reserve May Announce Exit of Stimulus Measures

Concern that FOMC may remove stimulus measures encouraged appeal for the US Dollars. As a result the Dollar reached its week high versus the Yen and the Euro, according to Bloomberg.

Many economists tend to suppose that FOMC is likely to become a catalyst of USD rising as FED will probably announce the withdrawal of its economy stimulus measures. The USD rose to 92.17 yen as of 7:45 a.m. in London from 91.29 yen in New York Sept. 18. It jumped to $1.4645 per euro from $1.4712. The U.S. currency advanced to $1.6143 per pound from $1.6271, after earlier touching $1.6135, the highest level for the last three weeks. The USD index climbed 0.6 percent to 76.878.

The JPY fell to its three-week bottom versus the Euro after Hirohisa Fujii new Finance Minister refused to make comments meaning he would let the Japanese currency rise.

It is expected that Japan will remain the only country among big economies that will keep its benchmark interest rate at a record low. Japan`s Overnight call rate is now at the lowest level worldwide . The economy is likely to expand 0.8 percent next year after declining 6 percent in 2009 putting assets in the world’s second-largest economy not in favor comparing to those in countries with higher borrowing rates.

Iran Crisis Influence on Currencies

The new foreign exchange trading week started with the strengthening of the Dollar and Yen. The Asian tarders began buying of these currencies as the way of responding to political events in Iran. As some officials assume, political crisis causes demand for safe assets, such as the Japanese Yen and U.S. Dollar in this case. Both currencies succeeded in trading against Euro, it was reasoned by lowering number of speculating on interest rate difference.

However, the Japanese Yen shows 0.5 percent growth in the pair JPY/USD, meanwhile USD/EUR result does not seem so firm, about ¼ percent. At the open session EUR/USD is at 1.39, as Friday session closed at the point of 1.3940. The attempts to remain under the rate under 39 level failed. USD/JPY fell up to 96 level, while support for Yen came from cross-rates. Talk of bids by Japanese traders at 96.45/50, then 96.15/20 suggests buying the Dollar is favored in Asian market, however, as Nikkei has erased its initial gain(now up 29 points).

At the same time, despite the crisis in Iran the oil prices remain at the same level with no attempt to break the downside trend.

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