Forex today: FOMC on hold, dollar and yields drop
|Forex today was not kind to the dollar nor for its outlook due to the outcome of the FOMC meeting. As expected rates were left on hold, but there was very little that would indicate that the Fed could possibly be on track to hike in December, let alone in September.
While the Fed did stick to the script, with a statement that was very much in line with the June statement, the fact that they are preparing the market for a possible announcement in September on the balance sheet reduction strategy against a back drop of softer activity and inflation figures means that December is as early as the markets can expect a rate hike. Subsequently, bonds rallied, stocks made record gains, the dollar tanked and yields hit the skids. As of writing, DXY is -0.55% and the benchmark 10-years are -1.99% at 2.2890%.
EUR busted a fresh high at 1.1740, EUR/GBP kept on the campaign for the 0.90 handle with a high of 0.8955. Sterling got through 1.3100 with a high of 1.3121, the yen broke below 112.00 and made a low of 111.06. Commodities with the related carry and higher-beta currencies were all boosted by a weak dollar; AUD +0.69%, NZD +1.31%, CAD +0.49%, WTI made a high of $48.92 and Gold was elevated to a high of $1,263.44.
Events in Asia
No key events
Key notes from US session
- ECB appoints Hans-Joachim Klöckers and Massimo Rostagno as Directors General
- ECB’s Nowotny: Discussions have begun about tightening policy
- Fed leaves interest rates unchanged at July meeting
- Comparison between July and June FOMC statements
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