FX.co ★ Fundamental Situation Update August 9, 2011

Federal members announced interest fixation and talked about introduction of QE3.

The U.S. dollar Fell against most currencies after the Fed meeting followed by cautious statement.

It became clear that the Fed reacted to the deteriorating situation for the U.S. economy that would result in low interest rate for a quite long period until mid 2013.

The Fed announced that it is expected to have slower recovery rate in the coming period than expected during the previous meeting.
Regarding the unemployment rate, It was announced that it's going to decrease gradually.

The statement also noted that the committee discussed a variety of tools available to promote economic recovery which can be considered indirect reference to a new round of QE.

Thus, Scenario 3( Cautious tone & reference to QE) mentioned yesterday took place resulting in decline of USD as expected.

It's important to notice that we have an important report from UK about quaterly inflation data.