As predicted the US Federal Reserve maintained its current stance on interest rates leaving the benchmark between zero and 25 bps. The finer points of the policy showed a similar line to previous statements with the Fed maintaining interest rates at current levels for an extended period as Inflation will remain subdued for some time. In a recent speech in Washington, Fed Chairman Ben Bernanke was careful to paint a realistic view of the economic outlook, stating the economy faces formidable headwinds, and reaffirmed the fed's stance on interest rates to remain at current levels for an extended period with employment conditions likely to keep a lid on inflation.  The dire unemployment situation is considered the missing link on a sustained recovery in the US, although earlier this month we saw US Non-farm Payrolls show overwhelming signs of improvement, which had economists projecting the scales to turn to positive job creation by February 2010. 

The greenback faced moderate downward pressure overnight as the threat of near term interest rate hike subsided. The US dollar index which measures the dollar's value relative to six major foreign currencies is currently 0.11 per cent lower at 76.88. Sterling was the standout performer overnight rising to highs of over US$1.6400 as investor confidence was given a boost by better than expected jobless figures.  UK Jobless claims for the month of November fell 6,300 against an expected rise of 12,300 representing the first decline in new claims since February 2008.  

The Aussie dollar has continued to remain under pressure overnight consolidating around 90 US cents with yesterday's growth data capping any potential upside. Yesterday we saw third quarter Gross Domestic Product recorded a growth of 0.2 per cent against a second quarter rise of 0.6 per cent. The local unit extended losses when Deputy Governor Ric Battellino stated interest rate levels are now back in the normal range.  This of course adds further weight for the RBA to pause on interest rates in February.