The Buck's consolidation was short
The U.S. dollar rose rapidly against the Euro at the early Asian session, after the Fed's appeared to be unexpectedly harsh, although confirming earlier views on the economy. After two days of meetings the Open Market Committee left interest rate at 0.25% and promised to keep it for a long time to stimulate economic growth. Te decision was not unanimous. Thus, the president of the Federal Reserve Bank of Kansas City, Hoenig (Hoenig) wanted to remove the "a long period of time" phrase. In the final statement, the Fed re-confirmed its intention to call the majority of incentive programs off, including mortgage and agency bonds buy-back, until the end of the first quarter this year. The regulator should close the swap lines with other banks in early February. Such actions were perceived by markets as a possible preparation for the tighter monetary regulation. EUR/USD went under 1.40 mark, reaching six-month low at 1.3935. Later on Euro managed to consolidate to 1.40 as interest in risky assets grew back and European stock indices started feeling better. At the same time newly spread rumors that the debt and fiscal problems of individual members of the Monetary Union are threatening the very existence of the single European currency and the Euro area, continued to negatively impact the Euro.
The British pound continues to look quite confident on the background of a falling Euro and even strengthened against the Dollar. Pound's growth supported by an aggressive say of Bank of England's representative, Dr. Sentence, who said that the Bank of England must be prepared to change its policy due to economic recovery and rising inflation. The Bank of England might take a break off quantitative softening monetary policy, ending its buy-bond program.
The Reserve Bank of New Zealand met up last night have decided to leave interest rate unchanged at 2.5%. It was also said that the interest rate is definitely not going to change until mid-2010.
