Market Overview

Euro Steady At $1.25 Ahead Of Fed Meeting Minutes

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Euro Steady At $1.25 Ahead Of Fed Meeting Minutes
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The euro was steady above $1.25 on Wednesday as investors waited for the U.S. Federal Reserve to release its meeting minutes later in the day. The common currency traded at $1.2528 as investors continued to speculate that the European Central Bank would move in the opposite direction of the Fed.

Earlier this week, ECB President Mario Draghi assured the European Parliament that the bank was prepared to do what was necessary, including unconventional measures, to get the eurozone back on its feet. Draghi’s pledge gave investors more reason to believe that the bank will ease further at December's policy meeting.

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Draghi’s promises to step up if needed stand in stark contrast to the Federal Reserve, where central bankers are debating when and how to raise the bank’s interest rates. The Fed has already completely removed its quantitative easing from the markets, but promised to maintain low interest rates for a considerable period in order to give the labor market a chance to stabilize.

Reuters reported that analysts are betting that the Fed’s meeting minutes will take on a hawkish tone, something that would be positive for the dollar. Although Fed Chair Janet Yellen has expressed concern about growth in the labor market, recent data has shown a sizable improvement, while inflation figures have been stable.

The Fed has been on a lonely path in the current economic climate, as most of its peers are still looking at how to help stimulate the economy rather than pull back. This divergence in policy has helped boost the dollar and restore confidence in the U.S. economy.

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