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- Saturday, 17 October 2009 00:08:56 GMT Euro Near Major Top Against US Dollar, but Timing Anything but Clear
- Friday, 16 October 2009 23:25:32 GMT US Dollar May Be Setting Stage for Advance
- Wednesday, 14 October 2009 20:50:00 GMT Euro Rally Toward 1.50 Continues as Industrial Output Rises for Fourth Month
- Monday, 12 October 2009 20:05:09 GMT Euro Ends Week Just Above 1.4700 as German Trade Surplus Narrows
- Saturday, 10 October 2009 02:24:05 GMT US Dollar: At the Mercy of Risk Appetite...or is It?
- Friday, 09 October 2009 23:07:02 GMT Euro Could Succumb to ECB's Neutral Stance, Weak Data
- Friday, 09 October 2009 21:33:45 GMT Euro Ends Week Just Above 1.4700 as German Trade Surplus Narrows
- Friday, 09 October 2009 02:23:25 GMT German Current Account Set to Narrow in August
- Thursday, 08 October 2009 23:31:21 GMT Euro Looks like it May End up a Laggard in the Rate Game Given the ECB's Stance
- Thursday, 08 October 2009 23:30:39 GMT US Dollar and Dow on the Verge of Opposing Breaks
- Wednesday, 07 October 2009 21:15:48 GMT Euro Down as Q2 GDP Gets Revised Lower - European Central Bank Decision on Thursday
- Tuesday, 06 October 2009 17:45:40 GMT Euro US Dollar Exchange Rate Forecast
- Monday, 05 October 2009 19:42:00 GMT Euro Mostly Higher as Services PMI Signals Expansion for First Time Since May 2008
- Monday, 05 October 2009 03:52:22 GMT Euro Zone Investor Confidence to Hit 14-Month High But Markets May Not Notice
- Monday, 05 October 2009 02:38:33 GMT Euro Zone Retail Sales to Shrink for Second Month in August
- Saturday, 03 October 2009 02:35:09 GMT Euro: Will Risk Appetite Hold EURUSD Up or Will the ECB Ease a Break?
- Friday, 02 October 2009 21:38:58 GMT US Dollar Forecast for Recovery Will be Put to the Test
- Wednesday, 30 September 2009 23:15:36 GMT German Retail Sales to Shrink for Fourth Month, Outlook Remains Bleak
- Wednesday, 30 September 2009 20:07:43 GMT US Dollar Down Despite Q2 GDP Revision - Testimony from Fed Chairman Bernanke on Thursday
- Wednesday, 30 September 2009 00:28:00 GMT Euro Growth Outlook Bolstered by Retail Activity, Confidence but Market Little Impressed
The Federal Reserve left rates unchanged at 2.00 percent, as we had anticipated, but subsequent market-wide reaction was mixed as fed fund futures had been fully pricing in a 25bp cut to 1.75 percent. Going
Going forward, though, Credit Suisse overnight index swaps signal that the central bank will leave rates unchanged through the next 12 months - compared to expectations of a 25bp cut earlier today – as the Federal Open Market Committee’s policy statement signaled a more neutral stance. Indeed, it appears that the drop in crude oil from nearly $150/bbl in July down to below $95/bbl has helped to alleviate some of their inflation fears, since even the most hawkish member of the group – Richmond Fed President Richard Fisher – voted for no change. Furthermore, the Committee dropped a line noting “elevated” inflation expectations, suggesting they are a bit more confident that they’ve kept the public’s outlook for inflation in check.
Overall, the Committee’s balance of concerns regarding the “downside risks to growth and the upside risks to inflation” should lead them to leave rates steady through the end of the year. Looking more specifically at the market’s reaction, the US dollar jumped immediately on the news, but subsequently pulled back to pre-FOMC levels. Risky assets – like the JPY crosses – managed to stage a bit more of a recovery, though, amidst speculation that the Federal Reserve would bail out AIG, the world’s largest insurer. Ultimately, my fundamental bias for the US dollar remains bearish this week, as the previous rally was fueled by expectations of future interest rate increases. However, with the FOMC now signaling no change in rates going forward, that impetus has been removed.
Related Articles: Post-FOMC Analysis, FOMC Policy Statement Signals More Dovish Stance
Check out Daily Fundamentals in its entirety for analysis and outlooks on the US dollar, euro, British pound, Japanese yen, and the commodity dollars.
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