Currencies Remain Subdued Ahead of FOMC Decision on Rates

By Dan Bernstein ,

Currencies are little changed today as a dearth of data and anxiety over tomorrow's

Federal Open Market Committee meeting kept significant price changes in check.

Germany's leading economic institute,

Ifo

, said the euro isn't expected to change much in value through the end of the year, but will likely gain strength in January after the introduction of the hard currency into Europe. The euro has been range-bound against the dollar in recent weeks, floating between about 84 cents and 86 cents per euro.

The euro has lost almost 8 cents against the dollar since the start of the year,. In early June, the euro settled near the all-time low set last fall around 82 cents per euro. The currency traded for $0.8623 this morning, up from last night's closing price of $0.8586.

Ifo said that the euro would remain weak due to money from the black markets being changed to dollars ahead of the euro's hard-currency introduction. Europeans with large amounts of money the government doesn't know about are wary of converting those funds directly to euros for fear of being found out. Therefore, they convert their funds first into dollars, which is lending support to the U.S. currency. The conversion into the hard-currency euro, from dollars, in January, will likely add strength to the euro.

The euro also climbed slightly this morning against the yen, trading for 106.73 yen per euro recently, up from 106.35 yen at yesterday's market close. The dollar fell marginally against the yen, pricing for 123.78 yen per dollar this morning, down from last night's closing price of 123.85 yen per dollar.

Uncertainty over the outcome of tomorrow's interest rate decision by the FOMC has left traders wary of moving far in either direction today. The FOMC is expected to cut rates tomorrow, with traders almost evenly divided between those expecting a 25-point cut and the group looking for a 50-basis-point reduction.

The British pound crept up slightly against the dollar overnight to $1.4145. The pound closed yesterday at $1.4130.

The U.S. dollar also lost ground against the Australian dollar, which recently traded for $0.5188, up from Monday's close of $0.5168. The U.S. dollar slipped against the Canadian currency, and traded for C$1.5168 this morning. The U.S. dollar traded for $1.5171 loonies at yesterday's market close.

Currencies are little changed today as a dearth of data and anxiety over tomorrow's

Federal Open Market Committee meeting kept significant price changes in check.

Germany's leading economic institute,

Ifo

, said the euro isn't expected to change much in value through the end of the year, but will likely gain strength in January after the introduction of the hard currency into Europe. The euro has been range-bound against the dollar in recent weeks, floating between about 84 cents and 86 cents per euro.

The euro has lost almost 8 cents against the dollar since the start of the year,. In early June, the euro settled near the all-time low set last fall around 82 cents per euro. The currency traded for $0.8623 this morning, up from last night's closing price of $0.8586.

Ifo said that the euro would remain weak due to money from the black markets being changed to dollars ahead of the euro's hard-currency introduction. Europeans with large amounts of money the government doesn't know about are wary of converting those funds directly in euros, for fear of being found out. Therefore, they convert their funds first into dollars, which is lending support to the U.S. currency. The conversion into the hard-currency euro, from dollars, in January, will likely add strength to the euro.

The euro also climbed slightly this morning against the yen, trading for 106.73 yen per euro recently, up from 106.35 yen at yesterday's market close. The dollar fell marginally against the yen, pricing for 123.78 yen per dollar this morning, down from last night's closing price of 123.85 yen per dollar.

Uncertainty over the outcome of tomorrow's interest rate decision by the FOMC has left traders wary of moving far in either direction today. The FOMC is expected to cut rates tomorrow, with traders almost evenly divided between those expecting a 25-poing cut and the group looking for a 50-basis-point reduction.

The British pound crept up slightly against the dollar overnight to $1.4145. The pound closed yesterday at $1.4130.

The U.S. dollar also lost ground against the Australian dollar, which recently traded for $0.5188, up from Monday's close of $0.5168. The U.S. dollar slipped against the Canadian currency, and traded for C$1.5168 this morning. The U.S. dollar traded for $1.5171 loonies at yesterday's market close.

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