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FOMC Unchanged

Wed, Jun 24 2009, 21:56 GMT
by Korman Tam

Forexnews.com


6/24/2009 2:40 PM: EUR/$..1.3916 $/JPY..95.65 GBP/$..1.6400 $/CHF..1.0997 AUD/$..0.7958 $/CAD..1.1528

FOMC Unchanged

The FOMC announced the decision from its two-day policy meeting, leaving interest rates unchanged by unanimous decision, as largely expected. The statement noted that “economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period”. The Fed reiterated its outlook for improving conditions, saying recent evidence “suggests that the pace of economic contraction is slowing”. Concerns that the FOMC would tighten policy were abated, with the Fed saying “substantial resource slack is likely to dampen cost pressures” from recent increases in energy and commodity prices, but “the Committee expects that inflation will remain subdued for some time”.

The US economic data released earlier in the session included durable goods orders and new home sales. The durable goods orders report was sharply better than expectations, with the headline figure beating calls for a decline of 0.6% from an increase of 1.7% in April, instead, improving by 1.8% in May. The excluding transportation durable goods orders increased by 1.1% from a 0.4% increase a month prior. New home sales were softer than expected, lower by 0.6% to 342k units in May from 352k units previously.
 
Swissie Plunges on Intervention

The Swiss franc plunged sharply in Wednesday trading, losing nearly 4-big figures from 1.0635 to 1.1020 against the dollar and a fresh 3-month low versus euro at 1.5379. The sharp declines fueled further speculation that the Swiss National Bank was behind the moves, engineering the Swiss franc sharply lower by intervening in the foreign exchange market. Although the Bank of International Settlements, which would act on behalf of the SNB, declined to comment on whether it had been selling francs, the evidence was clear in the charts.

USDCHF spiked above the 1.10-level to its highest level in a month at 1.1020. The pair subsequently dipped to 1.0940 with support seen at 1.09, followed by 1.0840 and 1.08. A breach below will target 1.0760, backed by 1.0720 and 1.0650. Ceilings will emerge at 1.10, followed by 1.1020 and 1.1080. Subsequent resistance is eyed at 1.1150, backed by 1.12 and 1.1240.


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