01, August 2013

EUR/USD (a 4-hour chart)

EUR/USD (a 4-hour chart)

The U.S. dollar was traded slightly higher against most currencies before the meeting of the Federal Reserve System on Tuesday. Investors are also waiting for a number of key U.S. economic data this week. It is likely that the Fed will leave its policy unchanged. Investors will be watching closely for any comments on the program to stimulate the economy by the Federal Reserve System. Today there will also be a release of preliminary data on U.S. GDP for the 2nd quarter.

The Australian dollar fell sharply after news of the central bank of Australia, which seems to open the door for a possible cutting of interest rates. Since April, the Australian dollar has fallen 14% against the U.S. dollar due to the slowdown in China. China is the largest trading partner of Australia.

The 10-year bond profitability was 4/32 lower on Tuesday, stepping up to 2.603%. Yield rebounded from 23-month peak of 2.756% set earlier in July.

Yield rose sharply after falling to a low of 1.612% this year on May 1. More than 1 percentage point increase bond market experienced for many years, which underscores the concerns about rising interest rates spooked bondholders.