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The dollar gains against most major peers. Results of FOMC Fed meeting failed to convince investors global growth will be sustained.
Yesterday the FOMC redefined "extended period" as "at least through mid-2013" left its rates unchanged (0% -0.25%). The Fed also noted that inflation is moderated and will settle lower, but "downside risks to the economic outlook have increased." Fed expects slower pace ahead than in June.
The euro tumbles versus the dollar in the wake of concern that Europe will fail to contain its sovereign-debt crisis. The pair declined amid speculation that France Europe's second largest economy after Germany may be first to face a rating cut even though the major rating agencies have reiterated France's AAA rating.
The yen drops against the dollar. Earlier the currency gained, approaching a post- World War II high versus the dollar, as the Federal Open Market Committee’s pledge to keep interest rates at a record low until mid-2013 failed to convince investors growth will be buoyed. Central Bank of Japan is also ready to intervene to prevent the growth of currency as the latter hurts its export- aimed economy.
The Swiss franc weakens versus the greenback after the Swiss National Bank said it will “significantly increase” the supply of liquidity to the money market and expand banks’ sight deposits to fight the currency’s “massive overvaluation.”
The Canadian dollar sheds on concern that U.S., Canada’s biggest trade partner, growth is flat-lining. Declining oil prices also put pressure on the currency. Oil didn’t soared despite the U.S. Energy Department reported the oil inventories fell by 5.23 million barrels to 349.8 million in the week ended Aug. 5, while analysts expected a rise by 1.35M barrels.
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