Fed keeps US Dollar rates weak – best rates for 4 years

10 April, 2014

Robin Haynes

The Federal Reserve minutes, released overnight, shed little light on upcoming US monetary policy, but did confirm that the pace of any interest rate rises is likely to be slower than previously predicted. The 16 Federal Reserve members had been indicating that the US bond buying programme would be wound down in 2014 with interest rates set to rise through 2015 – but now, the Fed has confirmed that these predictions “overstated the shift” in monetary policy, and eased concerns that interest rates would rise before the economy is ready. Chairman Janet Yellen indicated that interest rates would remain low for at least 6 months after the end of bond buying.

While the minutes have eased concerns on Wall Street, the US Dollar itself weakened overnight, since higher interest rates would likely be one of the main drivers of a more expensive US Dollar. Conversely, indications of lower interest rates for longer, help to keep the US Dollar weak, which last night gave us the best rates for sending US dollars (and pegged currencies such as the UAE Dirham) since November 2009.

In a reminder of the 24-hour nature of the currency markets, Australian unemployment figures were also released overnight, coming in better than expected and making the Australian Dollar its most expensive since November 2013.

Today we also have the Bank of England’s monthly announcement of UK interest rates and Quantitative Easing. This is very unlikely to throw up any surprises. The European Central Bank does however publish its monthly report at 9am which can cause Euro price volatility, but afterwards we are in for a quiet day until the next round of German economic data tomorrow morning.

With US Dollar rates in particular looking very attractive, contact us at Currency Index for a free live quote on your own transaction and some opinions on current rates in the market.