Market participants expect the results of today's Fed meeting - 18.12.2013

On Tuesday, trading in major currency pairs has been relatively quiet. The dollar index remains in a narrow range 80,4-79,75. Market participants are expecting the results of today's meeting of the U.S. Federal Reserve on which the parameters of further bonds government purchase will be declared. Most investors await Fed's decision on reducing monetary stimulus at $ 10-15 billion from the current level of $ 85 billion. However, they are focused not even on specific parameters of the next stage of "quantitative easing" but on a certain Fed's "signals" about future dynamics of interest rate.

The thing is many investors believe that the possible reduction in asset purchases, which is carried out by printing money, will cause higher interest rates of the dollar. As a result, it can significantly increase the demand for U.S. currency and contribute to its strengthening.

Today at 19-00 CET Fed is going to announce its decision. At 19-30 CET the press conference by Fed Chairman Ben Bernanke is speaking. We believe that in markets we'll see increased volatility. Changes in the discount rate (0.25%) in the USA is not expected.

Amid uncertainty over the further movement of the US currency, investors teansfer their money to Switzerland. Yesterday Swiss Franc (USDCHF) continued strengthening and updated two-year low.

Australian Dollar updated four-mounth low against the U.S. currency (AUDUSD) contrary to the positive statements of the Governor of the Reserve Bank of Australia Glenn Stevens that the stimulus measures have a good effect. The exchange rate of the Australian dollar against the euro (EURAUD) approached the four-year high.

We do not exclude some strengthening of the U.S. dollar against other major currencies in case of favorable reaction to the U.S. Federal Reserve decision today.