Forex Today: Fed sent the dollar further lower
|What you need to know on Wednesday, May 11th:
The dollar ended the day lower against most major rivals, weaker against safe-haven rivals after a dovish US Federal Reserve. Equities initially rallied with the news but turned lower as Powell offered a speech, ending the day in the red.
The central bank left the benchmark interest rate unchanged at 0%-0.25% as widely expected. Among other things, the statement showed that policymakers will continue to buy Treasuries and mortgage-backed securities “at least at the current pace” over the coming months. The dot-plot showed that rates will remain at current levels until 2022. Powell reiterated that the central bank is ready to use its full range of tools to support the US economy. The GDP is seen falling by 6.5% this year, yet rising 5.0% in the next.
The EUR/USD pair hit 1.1422 and settled around 1.1390, while GBP/USD reached 1.2812 to finish at around 1.2750.
According to a leaked document, the European Parliament could veto any trade deal between the UK and the EU that fails to ensure fair competition and strong standards on the environment and workers’ rights.
Commodity-linked currencies rallied to fresh multi-week highs against the greenback, but trimmed most of their intraday gains ahead of the close, dragged lower by equities. The USD/JPY pair settled a few pips above 107.00.
Gold prices soared, with spot ending the day at around $1,736.60 a troy ounce. Crude oil prices advanced intraday but pulled back from highs alongside Wall Street.
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