U.S. Dollar Falls Against The Euro

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The U.S dollar fell further against the Euro Monday, April 25th, just in time for the April 26-27 Federal Open Market Committee meeting,
Reuters
reports. This news comes shortly after Standard & Poor shifted the United States AAA credit rating from a stable outlook to a negative one, and the bad news and uncertainty continues for the U.S. Reuters reports that the main reason for the weak dollar is the Federal Reserve's loose monetary policy coupled with stagnant interest rates. The European Central Bank is raising interest rates while the U.S. Fed has remained steady. Last week, the European Central Bank raised its refinancing rate from 1%, a record low, to 1.25%. The U.S. Federal Reserve has kept its main refinancing rate close to zero since December 2008. The dollar is currently trading at 73.972, only a slight increase from the three-year low of 73.735 reached last week. The Euro is currently at 1.4604, which is very close to the 16-month high of 1.4649 also reached last week. Market members will be anxiously awaiting the Federal Open Market Committee post-meeting news conference, with hopes of more competitive interest rates to drive up U.S. currency. The internal conflict within U.S government regarding budget deficits and growing debt does not help the dollar either. Despite the U.S. unemployment rate continuing to decrease, people applying for jobless benefits is still too high and further reinforcing the stagnant low interest rates. At the end of the week of April 9th, the number of applications for unemployment benefits fell from 382,000 to 380,000. Regardless of the outcome of Federal Open Market Committee meeting, it won't be a speedy recovery for the dollar. The Federal Reserve expects to slowly recover all of the money initially circulated back in 2008 to help the economy get out of the recession. According to Reuters, inflation and rising commodity prices are only driving the value of competitor currencies up, with Canadian and Australian dollars hitting multi-year peaks.
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Posted In: NewsPoliticsPersonal FinanceGeneralFederal Open Market Committee
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