The U.S. Dollar traded slightly lower while just off a 7-week high versus the Japanese Yen, due to falling oil prices, even though the Fed’s announcement to keep interest rates unchanged dampened expectations that interest rates would be increased any time soon.
The Fed left interest rates unchanged at 2% as was widely expected. However, the accompanying press release had a dovish tone compared to the June release. According to the statement, the recent fall in the price of crude oil should help in easing the inflationary pressures and the tight liquidity conditions. A continued slowdown in the U.S. housing sector is likely to impact negatively on economic growth in the coming few quarters.
On August 6, 2008 at 08:35 GMT, the U.S. Dollar traded at 108.40 Yen versus 108.29 at 04:00 GMT, while the Euro remained steady ahead of data from factory orders from Germany for June, which was expected to be released at 09:00 GMT; this data is expected to show an increase of 5% compared to the previous month. At 08:33 GMT, the Euro traded at $1.5488 versus $1.5492 at 04:00 GMT. Against the Pound Sterling, the Euro traded at 0.7922 Pounds versus 0.7916 Pounds at 04:00 GMT. The Pound Sterling was steady because the monetary policy committee just began its interest rate setting meeting, which will take place over the next two days.