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The Fed acknowledges the  slowdown in the unemployment but sees the bigger picture as positive. Inflation is lower but stable on the long term. The Fed  removed the line about international developments.  Suddenly not worried about China? Or perhaps only Chinese stock markets? They see the domestic economy as expanding at a moderate pace. Perhaps most importantly, the Fed mentioned its “next meeting” – giving a fat hint of a hike.

EUR/USD loses 1.10 and the USD is generally stronger across the board.

There was one dissenter once again: Jeffery Lacker.

From the statement:

Information received since the Federal Open Market Committee met in September suggests that economic activity has been expanding at a moderate pace. Household spending and business fixed investment have been increasing at solid rates in recent months, and the housing sector has improved further; however, net exports have been soft. The pace of job gains slowed and the unemployment rate held steady. Nonetheless, labor market indicators, on balance, show that underutilization of labor resources has diminished since early this year. Inflation has continued to run below the Committee’s longer-run objective, partly reflecting declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation moved slightly lower; survey-based measures of longer-term inflation expectations have remained stable.

Another key passage (emphasis mine):

In determining whether it will be appropriate to raise the target range at its next meeting, the Committee will assess progress–both realized and expected–toward its objectives of maximum employment and 2 percent inflation

Quick analysis:  December Liftoff Remains On The Table – Nordea

Currency reactions



  • EUR/USD is down to a new cycle low of 1.0926.
  • GBP/USD is sliding to 1.5270
  • USD/JPY is at 120.82.
  • USD/CAD is struggling around 1.32
  • AUD/USD slips under 0.71
  • NZD/USD lost support at 0.6666 ahead of its rate decision.

The Federal Reserve was not expected to change its policy now. The next move is expected to be a rate hike and recent data failed to convince of a need raise rates urgently. In addition, there is no press conference nor fresh forecasts. The big question was about the statement and the move in December:  leaving the  text mostly unchanged (dollar positive) or hinting that a rate cut is off for this year (dollar negative).

Follow the live coverage here — lots more coming

Before the event, the US dollar was slightly weaker than earlier in the day: EUR/USD at 1.1075, GBP/USD at 1.5323, USD/JPY at 120.50, USD/CAD at 1.31, AUD/USD at 0.7150 and NZD/USD at 0.6720.

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