Forex news feeds: What you need to know for the holiday season
A month after a surge in forex trading volume, the U.S. central bank on Wednesday unveiled a series of measures to curb a volatile market.
The announcement comes just days after the U,S.
Federal Reserve and other central banks announced plans to gradually reduce interest rates in response to global economic weakness.
The Fed and other Fed officials have also signaled that they might begin to cut their bond-buying program if economic growth falters.
Forex trading in New York, London, Frankfurt, Paris, Singapore, Zurich and Hong Kong has continued to rise this year amid a sharp fall in global stock prices and a weakening yen.
The S&P 500 index and Dow Jones Industrial Average each gained more than 100 points in the final 24 hours of trading.
But the rally has slowed sharply, falling about 6 percent in the last three weeks.
The Nasdaq composite has shed about 6.7 percent.
Forests are bracing for another bout of turmoil.
Investors are weighing the impact of the central bank’s plan to lower interest rates and the Fed’s decision to raise interest rates more aggressively, especially after the Fed raised rates again last month, said Jeffery Kagan, a market strategist at Fidelity Investments in New Jersey.
Forecasts for global economic growth in the second half of the year have been revised downward, and the dollar has fallen against other currencies, making it more difficult for the Fed to stimulate the economy.
The euro has weakened to $1.1770 from $1 .1840.
“We’ve seen an unprecedented selloff in asset prices in the past two weeks,” said Brian Paddick, head of commodities at J.P. Morgan Securities.
“I’m not convinced the Fed is going to have much of a rebound in inflation, which is still in the low single digits.”
The Fed’s policy-setting council said in a statement that it is “considering the need for further tightening.”
The council said it would continue to assess the outlook for economic activity in the near term and “make adjustments where appropriate.”
“The outlook for inflation in the longer term remains uncertain, but the outlook does not appear to be at risk of increasing significantly in the medium term,” the statement said.
The central bank last month raised interest rates for the first time in nearly a decade, to 1.75 percent.
Investors reacted with anger and disappointment.
The dollar surged after the announcement, rising nearly 3 percent against the euro and about 2.5 percent against Japanese yen.
“The dollar is now the worst performing currency in the world,” said John S. O’Neill, chief investment officer at Renaissance Technologies in Charlotte, North Carolina.
The dollar was trading lower at $1,242.94 as of 8 p.m. “
Now, they’re going to do something about it.”
The dollar was trading lower at $1,242.94 as of 8 p.m.
ET in New Delhi.
Traders and analysts said the move to reduce interest rate rates would be a welcome relief for investors who have been struggling with stagnant inflation and rising inflation expectations.
“It’s a nice boost for investors,” said Jeff Noll, chief market strategist with Renaissance Securities in Philadelphia.
“If the Fed moves more aggressively than what’s been happening, I think that could make the currency more attractive.”
The FOMC’s move Thursday to reduce its benchmark overnight interest rate to 0.25 percent from 1.25% will also provide a boost for the dollar, traders said.
“This is going the way it was meant to be,” said Jonathan Blanchard, chief currency strategist at Citi Research.
“There are no signs of any imminent deflationary pressures in the global economy.
I think this will be a positive for the economy.”
The currency will rise slightly from that level, however, Blanchards prediction for the day will be for the U .
S. dollar to trade around $1 to $2.20 per euro.
“They’ve got to keep that pace going and it’s going to be a bit of a drag on the dollar,” Blanchs said.
Investors will also need to watch for the impact on stocks.
The Dow Jones industrial average was up 0.4 percent.
The broader S&p 500 index gained 0.8 percent.
Russell 2000 was up 1.3 percent.
Dow Jones Energy Index was up 3.3.
The broad Nasdaq Composite Index gained 2.4.
Forecast for the year The S+P 500 gained more 1,000 points on Tuesday, the biggest gain since the beginning of the recession in 2007, when it reached its all-time high.
The index was up 8.7% in the three weeks ended Sept. 30.
The benchmark S&P 500 is down more than 10% in each of the last two months, and