Free Trial

Greenback Sharply Lower As No Guidance For September Sparks Risk Rally

FOREX
  • The US Dollar has traded significantly lower on Wednesday, following the July FOMC decision and subsequent press conference.
  • The greenback received only a modest downtick following the decision to hike rates by 75bps, with the statement flagging softer spending and production indicators. However, Chair Powell’s signal that the September meeting has no particular guidance and that rate hikes will eventually slow, has sparked a relief rally across equity markets and in turn weighed heavily on the USD.
  • EURUSD made light work of the day’s highs through 1.0172, trading as high as 1.0221 towards the end of the presser. The pair hovers just below the highs approaching the APAC crossover.
  • Price remains below immediate resistance at 1.0278, the Jul 21 high of which a break above would once again resume short-term bullish conditions and signal scope for an extension higher within the bull channel - the top intersects at 1.0441.
  • Broad dollar weakness (DXY -0.78%) and the overall firm dovish effect on risk sees the likes of GBP and AUD atop the major currency leaderboard, mirroring gains of close to 1% and USDJPY roughly 100 pips off its best levels around 136.50.
  • Despite Chair Powell essentially cementing the idea that the FOMC won't pay much attention to tomorrow's GDP number, markets will inevitably eagerly await the data for clues as to the ongoing trajectory for US growth. As a reminder, Treasury Secretary Yellen is due to speak following the data.
  • Aussie retail sales will hit the wires overnight before preliminary regional German CPI data will be released throughout the European morning.

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.