FOREX Markets – Market Outlook

The U.S. currency declined against the majority of its 16 major peers as Bank of Atlanta President Dennis Lockhart, who has backed the Fed’s decision to carry on with its monthly bond purchases of $85 billion said that the Fed’s policy should focus on creating a more dynamic economy. The Yen gained against most of its major peers as U.S. two-year note yields dropped 20 basis points since reaching 0.53 per cent on Sept. 6, the highest level since May 2011. The Euro fell versus the dollar after European Central Bank President Mario Draghi said he’s ready to deploy another long-term refinancing operation, if needed. The U.S. dollar continues to trade near lows versus the euro and other major foreign-exchange counterparts and depending on whether these levels will hold or not we could see a further decline in the value of the USD.

The dollar weakened 0.5 per cent to 98.85 yen at 5 p.m. New York time and it lost 0.2 per cent against the Euro, trading at $1.3493. The U.S. dollar fell after policy makers said on Sept. 18 that they want to see more proof that the US economy is recovering before they will start to curb their bond-purchase program. This caught analysts by surprise, it was widely expected that the Fed would make a 5 to 10 billion cut in the bond purchasing program. The dollar may also stay under pressure as a deadline for increasing the U.S. government’s debt ceiling approaches.