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EUR/USD update (24th Aug 2012, 06:00)

Overnight, most of the major currency pairs, with the exception of the euro, lost ground against the dollar as investors tempered their expectations of further quantitative easing, which were elevated during the previous session after the release of the Fed’s latest FOMC meeting minutes.

While the minutes had suggested many committee members thought more QE would be warranted should the pace of the US recovery not substantially improve, St. Louis Fed President James Bullard suggested those minutes were ‘stale’ and current economic conditions were not weak enough to warrant further easing.  Sticking to his usual dovish bias, Chicago Fed President Charles Evans noted that the Fed needs to take ‘more action’ and inflation currently is ‘modest to say the least’. Both are non-voting members of the FOMC. 

There now once again appears to be a state of confusion as to what the market can expect from the Fed at its next meeting in mid-September and what Ben Bernanke might say in his speech at Jackson Hole at the end of the month.  The euro bucked the reversing trend of other risk currencies, pushing higher, perhaps on continued short covering, moving from 1.2530 at the end of the Australian session to close US trade at 1.2564. 
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EUR/USD update (24th Aug 2012, 06:00)

Overnight, most of the major currency pairs, with the exception of the euro, lost ground against the dollar as investors tempered their expectations of further quantitative easing, which were elevated during the previous session after the release of the Fed’s latest FOMC meeting minutes.

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