By TraderVox.com
Tradervox (Dublin) – The FOMC minutes were released yesterday showing that some members still think quantitative easing might be required is the economy loses momentum due to turmoil in Europe or due to the inability of lawmakers in US to reach consensus on the budget. As a result the dollar retreated from its four-month high against the euro as yen declined against 16 of the most traded currencies as speculation of Bank of Japan added stimulus next week rose. According to BOJ governor Masaaki Shirakawa, the central bank is keen on supporting growth in the country.
The turmoil in Greece and Europe as a whole has worsened as Greek political leaders failed to form a unity government. This is set to force Greece into another election with international bailout and it position in the 17-nation currency bloc at stake. The south pacific currencies have been able to shake off the recent decline as a result of the political turmoil in euro area. Some analysts have said that the recent decline of the dollar against the euro has been as a result of sentiments by some FOMC members that easing might be necessary if there is enough downside risk to the economy. Sentiments from the FOMC might force traders to pause there demand for the dollar causing it to stabilize.
There is also a growing concern about the BOJ’s intention to add stimulus next week which has caused traders to shy off from the yen. According to Bill Diviney and Masafumi Yamamuto, the escalating speculation of BOJ easing is one of the reasons the yen has weakened.
The greenback dropped against the euro by 0.2 percent to trade at $1.2739, ti had earlier climbed to $1.2681, which is the strongest it has been since January 17. The yen dropped by 0.1 percent to exchange at 102.25 yen per euro from yesterday’s close when it touched 101.91 yen which is the strongest since Feb 14.
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