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The Federal Reserve made no material changes to its policy. After a few positive months of data followed by negative ones, another “no change” decision was expected. The news comes from the first paragraph in which the Fed points a finger at the government.

EUR/USD traded at 1.3195 before the publication, below the 1.32 level it already reached earlier in the day. Some of the US data came in within expectations and some below expectations today. The pair is trading choppily. USD/JPY has moved higher.

Here is the change in tone towards politicians, from the statement:

Household spending and business fixed investment advanced, and the housing sector has strengthened further, but fiscal policy is restraining economic growth.

So, if it weren’t for the government, the economy would be doing better, according to the Fed. And, it also hints that the Fed isn’t prepared to much more, despite some signs of weakness. This is a relatively hawkish statement from the usually dovish Fed.

It also shows that the Fed has a limited set of tools in its shed. This is less of the “we will do everything it takes” and more of joining the blame game that Washington is so good at.

The Fed maintains the policy of open ended QE in the size of $85 billion per month. The interest rate guidance has been unchanged: it could be raised when unemployment falls to 6.5% and if inflation expectations remain low.

The FOMC also stated that it is prepared to increase or reduce the level of purchases according to the developments. There is no hint here of more QE or less QE.

Update: after initial choppiness, EUR/USD is now on the rise and trades at 1.3220 a of 18:20 GMT, breaking again above 1.32. Is the market seeing a dovish side in the word “increase” regarding purchases?

Update 2, 18:40 GMT: Indeed, some analysts see the decision as an “open door” to purchase increases, but in the meantime the dollar returns to strengthen.EUR/USD is still struggling with 1.32.

More:  No change from the Fed is also a market moving outcome