Following the release of the minutes of the Federal Open Market Committee (FOMC), which showed that the Federal Reserve has lowered its growth estimates for this year, the U.S. Dollar fell against both the Euro and the Yen. Minutes from the FOMC meeting of April 30, 2008 showed that the Fed has reduced its estimate of the gross domestic product for this year to a range between 0.3% and 1.2% from the original estimate of between 1.3% and 2%. The gross domestic product is an estimate of the value of goods and services generated in the United States. It is by far the best indicator of the strength of the economy.
The minutes of the FOMC showed that, although the Fed has revised its inflation forecast for 2008 to between 3.1% and 3.4%, compared to the original forecast of between 2.1% and 2.4%, the Federal Reserve remains hesitant to cut interest rates in the near future.
On May 21, 2008 at 10:00 am (00:00 GMT), the U.S. Dollar traded at 102.86 Yen, compared to 103.04 Yen, while the Euro traded at $1.5794, compared to $1.5795 in late trading in New York.
The weakness of the U.S. economy, coupled with the better than expected reports from the Euro zone, continues to put the U.S. Dollar under selling pressure.