Last week was very dramatic in the Forex market: The peak was the interest rate cut on Tuesday by Ben Bernanke: a 0.75% cut to 0.25%. This weighed heavily on the USD, on all fronts. Later on, the dollar made a big comeback, especially in against the Euro and the pund. Both EUR/USD and GBP/USD made huge swings and made forex traders cling to their computer screens.
The Federal Reserve also announced a new policy (or new tools) of Quantitive Easing. This method which became a buzzword in the financial markets, is explained very nicely by Kathy Lien.
Near the end of the week, the BOJ also made a rather sharp interest rate cut – down from 0.3% to 0.1%. This made the Japanese Yen shake only slightly. The big new from Japan came only after the markets closed: the Japanese government announced the new budget. It is bigger than the previous budget by 6.6%.
Other than that, the British pound suffered badly last week: a flow of bad economic data from the UK pushed the British pound lower. A noticeable pair is the EUR/GBP which is getting close to parity. It is currently trading at 0.9315.
Also the Canadian dollar was quite shaky, mostly due to inflation data, and a speech by BOC Gov Mark Carney.
Have a great weekend (or what’s left of it)!
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