The market has maintained its expectation that the Fed will deliver another further cut in rates stating that the US which is the world's largest economy is weathering a bad housing slumps, food and energy prices spiking at the time where the economy lost jobs. The mounting economic tensions have weakened the dollar's value in the eyes of investors pushing them to sell their dollar's holdings.
Early Wednesday, the euro surged to a record high of 1.5144 dollars yet dipped slightly to 1.5104 dollars in European trading. Today though the dollar remains near a record low point against the euro, the dollar firmed its positions waiting for more speech from Federal Reserve Chairman Ben Bernanke. As we all know yesterday Mr. Bernanke signaled the prospect of more cuts to interest rate.
Market players were also looking ahead to the ECB's monetary policy meeting next week where analysts expect that interest rates will be left on hold at 4.0% as the central bank remains hawkish in its monetary action position owing to high inflation.
Meanwhile, the GBP has been inclining on the back of the weak dollar but yet it is seen that the pound will decline soon as BOE will lower interest rates to resolve the economic slowdown in the UK. Today the pair is dragged to the upside by a weak dollar to record at this hour a high of 1.9890 and a low of 1.9859
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