Major currencies traded in a mostly narrow range today, as the US dollar awaited the decision out of the Federal Reserve. The Fed was expected to end its quantitative easing program and October was going to be the last month when the central bank pumped fresh money into the markets through the purchase of government and mortgage-backed bonds.
Nevertheless, the Fed was probably going to stick to its promise of ultra-low rates for a “considerable time”; a pledge that encourages investors to continue to load up on risk assets. This expectation has benefited high-yielders such as the Australian and New Zealand dollars in recent sessions. The Fed’s outlook for the economy, the comments about the labor market as well as inflation, will be keenly followed and even slight deviations in the Fed’s language could lead to wide swings for the dollar and risk assets.
The euro was trading around 1.2740 against the dollar and dollar / yen was close to 108.10 for most of the session.
Following the pounding of the Swedish crown the previous day, today was the turn of the Norwegian crown to come under intense pressure following weak unemployment figures, which spurred speculation about a relaxation of monetary policy from Norges Bank.
Looking ahead, following the outcome of the Fed meeting, attention will turn to the meeting of the Reserve Bank of New Zealand a few hours later and tomorrow’s GDP growth for the third quarter out of the United States. The data is expected to show the world’s largest economy growing at around a relatively decent 3% annualized pace.