The main theme of the Wednesday’s trading session was the monetary policy meeting of the Federal Reserve. The Fed managed to surprise the market even as it has left the policy stable.
The US central bank kept its target interest rate at the 0.25%-0.50% range. Yet the important thing was that it lowered the expected path of interest rate increases in the future, predicting just two hikes by a quarter of a point this year instead of the previous prediction of four. Additionally, growth and inflation projections for 2016 were also lowered.
As for US economic data, it was fairly mixed and did not affect the dollar in a significant manner. The currency, which had been rising ahead of the Fed announcement, crashed after the event.
EUR/USD rallied 1% from 1.1105 to 1.1212 as of 21:56 GMT today after touching the session low of 1.1057 intraday. GBP/USD was up from 1.4151 to 1.4251, bouncing from the daily minimum of 1.4052. USD/JPY declined from 113.18 to 112.65 following the rally to 113.81.
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