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Breaking news

Federal Reserve Leaves Interest Rates Unchanged, Maintains Monthly Asset Purchases

Real Time News
  • Both the S&P 500 and $DXY are up immediately after the statement. Has the Fed executed the perfect dismount? (some olympics pun in there)
  • Fed leaves rates unchanged, QE unchanged, announces two new repo facilities, and only says that "progress" - but not "substantial" -has been made. Bond markets are seeing this with an ever-so-slightly hawkish hue; long-end flattening, butterflies show higher intermediate rates.
  • The Fed has cut another line from its massive stimulus program by saying they have made progress towards criteria for Taper. Their principal hurdle is now the warning around the Covid economic risk https://t.co/VdjspRzJqO
  • Standing Repo Facility Summary: - Will take Treasuries, Agencies, Agency MBS - Standing Repo Facility Rate will be 0.25% - Operation limit of $500 B, effective July 29
  • Federal Reserve announces launch of Standing Repo Facility, effective July 29 $USD $DXY
  • $USD catching a quick bid after the statement release. support plays out https://t.co/gDaVJFc604 https://t.co/oy4UJS0R3V
  • The Fed holds rates - no surprise. But says it has made progress towards its economic goals as a precondition of taper: https://t.co/7nqJDDzqYC
  • 🇺🇸 Fed Interest Rate Decision Actual: 0.25% Expected: 0.25% Previous: 0.25% https://www.dailyfx.com/economic-calendar#2021-07-28
  • Indices Update: As of 18:00, these are your best and worst performers based on the London trading schedule: France 40: -0.15% US 500: -0.18% FTSE 100: -0.21% Germany 30: -0.23% Wall Street: -0.39% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/kHQEDOnDc4
  • Here is my scenario table again for the #FOMC decision. Focus is on the statement and the Press conference https://t.co/SPKmSrDcuy
Australian Dollar Tumbles As Capex, Building Approvals Fall Short

Australian Dollar Tumbles As Capex, Building Approvals Fall Short

David Cottle, Analyst

Australian Dollar, Capital Expenditure and Building Approval Data, Talking Points:

  • Capital Expenditure fell markedly in the year’s first quarter
  • Building approvals continued their long dive
  • The Australian Dollar took a modest knock but was already on the mat

Join our analysts for live, interactive coverage of all major economic data at the DailyFX Webinars. We’d love to have you along.

The battered Australian Dollar took a further knock Thursday as some domestic economic numbers came in well below forecasts.

First quarter private capital expenditure fell by 1.7% from the previous three-month period. The market had hoped for a rise of 0.5%. This turn out could be significant for overall growth given that many past improvements have been reliant on inventory building. A lack of capital investment could suggest that there will be little else to rely on once that build process finishes.

Sadly for Aussie bulls, there was more feeble data on tap. Building approvals fell by 4.7% on the month and a very chunky 24.7 on the year, both much weaker than expected. This series has been in steep decline since the start of 2018 but there seems to be no sign of any letup yet.

AUD/USD was knocked lower by these numbers but had already seen sharp falls since mid-April as perhaps the currency pair most exposed to rising global trade tensions.

Australian Dollar Vs US Dollar, 5-Minute Chart

As a currency with strong perceived links to both global growth generally and China’s economic performance in particular, the Australian Dollar has unsurprisingly been weakening this year as the US-China spat has shown no sign of letup but has rather intensified.

AUD/USD is now essentially at its lows for the year, if the wide intraday trading range of January 3 is stripped out. Moreover Australian interest rate futures markets now unambiguously price in two quarter-point cuts to the record low 1.50% Official Cash Rate, with some market watchers suggesting that more reductions could follow them.

Australian Dollar Vs US Dollar Daily Chart

Given Australia’s already high debt levels, this latter thesis may be something of a stretch. The Reserve Bank of Australia may well be reluctant to stoke borrowing much further.

Still, the currency clearly lacks intereest rate support right now, and further weak economic data will only add to this impression.

Resources for Traders

Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

--- Written by David Cottle, DailyFX Research

Follow David on Twitter@DavidCottleFX or use the Comments section below to get in touch!

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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