By CountingPips.com
The U.S. dollar reversed course from yesterday’s gains in the forex markets to fall sharply against the other major currencies today. The dollar has lost ground today versus the euro, Swiss franc, British pound, Canadian dollar, New Zealand dollar and the Australian dollar while trading close to unchanged versus the Japanese yen, according to currency data by Oanda at 5:25pm EST.
The U.S. stock markets, meanwhile, had a positive session today with the Dow Jones gaining by roughly 44 points, the Nasdaq increasing over 15 points and the S&P 500 showing almost a 9 point gain. Oil and gold both rose as oil climbed $2.02 to the $81.82 level while gold jumped $17.10 to the $1122.20 per ounce.
Today’s major economic event was the Federal Open Market Committee statement on the U.S. federal funds interest rate. The FOMC, as expected, concluded its monetary policy meeting today by keeping the U.S. interest rate steady at its record low level. The committee last cut the federal funds interest rate to the current target range of 0 percent to 0.25 percent in December 2008.
Today’s statement on the economy said that “economic activity has continued to strengthen and that the labor market is stabilizing. Household spending is expanding at a moderate rate but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit.”
Most of the anticipation for the last few meetings has been on whether the FOMC would give any hint on when the interest rate level might change. Today, the statement continued to use the same language as in the past, saying the rate is likely to remain at “exceptionally low levels” and for “an extended period.”
For a second consecutive Fed meeting, the decision was not unanimous as Kansas City Fed President Thomas M. Hoenig disagreed with the other nine FOMC members. According to the release, Hoenig thought that “continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted because it could lead to the buildup of financial imbalances and increase risks to longer-run macroeconomic and financial stability.”
Housing Starts, Building Permits decline
Also released out of the U.S. earlier today was U.S. housing data for February. Housing starts and building permits fell in February while housing completions rose for the month, according to data released by the Commerce Department on new residential construction. Housing Starts declined by 5.9 percent in February to a seasonally adjusted annual rate of 575,000 starts following an annual rate of 611,000 in January. February’s data, despite the decline, was better than the economic forecasts that were predicting a fall for the month to a 570,000 starts pace.
Building permits statistics, used as a predictor of future construction, showed a seasonally adjusted annual rate of 612,000 permits in February which was a decrease of 1.6 percent when compared to January. Building permits also surpassed matched forecasts that were expecting permits to number approximately 601,000 annually.
Housing Completions for February increased when compared to January as completions rose to an annual rate of 700,000 privately-owned housing completions. This is an advance by 5.4 percent from January’s completion totals which numbered a revised 664,000 completions.
AUD/USD Chart – The Australian dollar today surging higher versus the US dollar in forex trading. The AUD/USD rose to its highest level since January 19th to trade above the 0.9200 level.
