The dollar was weakened against the major currencies yesterday after growth forecasts were published.
Last month’s Federal Open Market Committee (FOMC) meeting minutes revealed predictions of an even slower economy than once thought for 2008.
Despite gaining ground against the yen, the information weighed heavy on the dollar, weakening it versus the major currencies, especially so against the euro.
The European currency was strong at $1.4841 against the dollar yesterday, rising even further at one point to reach its highest level since 1999.
“The FOMC minutes proved modestly negative for the US dollar as market players viewed the lowered growth forecasts and subdued core inflation forecasts as keeping the door open to further rate cuts next year,” Michael Woolfolk, senior currency strategist at the Bank of New York, told MarketWatch.
After the release of the minutes, futures showed a 92 per cent chance the Federal Reserve will cut rates in December, reports Reuters.
Despite being bad news for those living in the US, holidaymakers can take advantage of the weakness of the dollar, which creates bargains for British Christmas shoppers visiting the country.