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Fed leaves rates unchanged, mixed message – USD slides

Fed leaves rates unchanged as expected. 3 dissenters, a rarity. However, rate forecasts for the future have been slashed. Yellen is trying to balance confidence in the economy with waiting for more evidence, or in simpler words, less confidence.  She did say that if the economy continues running its current course, the path  will raise rates. She did not use these words, but the hint was quite clear. Needless to say, anything can happen until December, including a victory for Trump in the elections.

The US dollar is falling but movements are relatively muted. After the initial slide, things have balanced out. Further responses are likely in Tokyo and in the European open, once a narrative is carved out. Will this be seen as a hawkish hold? The 3 dissents, the statement about a stronger case for a hike and Yellen’s confidence are  reasons to see the hawkish side. The lower forecasts and the delay, once again, lean to the dovish side.

All in all, the USD might emerge as “the cleanest shirt in the dirty pile”, as expected.


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The Fed was not expected to raise rates in September  but the level of uncertainty was higher than usual.  Despite the low  chances of a hike now, Yellen and co. were projected to leave the door open for a hike in December, after the elections and  hopefully with better economic data. Here is the full preview: Dollar depends on door to December.

The US dollar  remained strong ahead of the event, with the exception of the yen: the BOJ recalibrated its policy, yet with few immediate stimulus steps. The greenback could remain the “cleanest shirt in a dirty pile” yet the yen has the potential to surge ahead. EUR/USD has been range trading for a long time and could explode now.

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Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.