Dovish, but not dovish enough for USD bears...>

FOREX: Dovish, but not dovish enough for USD bears

-The greenback sold off in response to the Fed decision: while policy was kept

unchanged, the Fed's dot plot showed the median Federal Funds Rate for 2020

dropping to 2.125% from 2.625% previously, with the terminal rate also shedding

25bps. This allowed markets to bid up EUR/USD to the week's highs (hitting

$1.1254) before pulling back somewhat after the press conference concluded.

While the initial market moves read as dovish, those looking for a firm

commitment from the Fed to act as soon as July will have been left disappointed,

leaving the USD index lower, but still well above last week's lows.

-GBP was one of the best performers Wednesday, with the Conservative leadership

contest whittling down to four candidates now. The GBP price action, looked more

reminiscent of a short squeeze, although better core CPI figures for May will

have helped.

-Thursday's another busy session for central banks, with the Norges Bank, Bank

of Japan and Bank of England decisions due alongside UK retail sales and

speeches from ECB's de Guindos, Enria and BoE's Carney.