The US dollar gained today, paring yesterday’s loss versus the euro, even as the Federal Reserve promised to maintain stimulus for a long time. The rise can be explained by macroeconomic data that supported the case for stimulus reduction.
The Fed kept its monetary policy unchanged yesterday. Such decision was expected, but traders were anticipating that the central bank will hint on quantitative easing tampering. Instead, the Federal Open Market Committee said in the statement:
To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens.
It was somewhat surprising, considering how healthy economy looks. It seems the market simply cannot believe that the Fed is not ready to trim stimulus yet, making the dollar stronger despite the statement.
EUR/USD dropped from 1.3300 to 1.3274 as of 4:25 GMT today. GBP/USD went down from 1.5204 to 1.5154, while USD/JPY advanced from 97.85 to 98.26.
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