Investors Wait For Fed Results

The US dollar fell slightly on Wednesday in advance of the ongoing Fed meeting taking place on Tuesday and Wednesday. The euro rose from a two and a half month low as traders took positions waiting for the results of the Fed meeting. The pound was boosted by better than expected UK employment data and the Aussie surrendered recent gains on weak Australian growth data. The Australian data prompted speculation that the Reserve Bank of Australia would put off raising rates. Investors remained focused on the Federal Open Market Committee’s meeting. The FOMC is expected to leave rates at record lows and investors will be searching the FOMC statement for any indication of when the Fed may tighten up its loose monetary policies. Michael Hart of Citigroup in London stated, “It had looked like the euro was breaking further lower, and the ever so slight possibility (building in the market) of the Fed tightening or winding down liquidity, which would be supportive for the dollar. But I don’t think we can expect too many fireworks from the Fed. They will be fairly cautious.”

EU Banking Concerns Pressure Euro

Concerns about the health of the Euro Zone’s banking sector have pressured the euro in recent trading sessions. A press report from Austria had said that the nation’s largest cooperative bank had been put on a watch list prompted banking concerns among investors. Lingering concerns about the Greek downgrade and the fiscal health of the EU member weighed on the euro in currency markets.

Pound Rallies on UK Employment Figures

New EU data showed that the Euro Zone manufacturing and service sector continued to improve in early December. Against the US dollar the euro last traded at $1.4578 after hitting a low of $1.4503 on Tuesday. The pound rallied as new UK employment data showed that the number of unemployment claims fell in November, the first improvement in almost two years. The pound was up 0.5% against the greenback at $1.6365 and traded at 89.05 pence against the euro.