Dollar Mixed After Fed Leaves Rates Unchanged

The dollar is turning in a mixed performance against its major rivals Wednesday afternoon. The Federal Reserve concluded its 2-day policy meeting this afternoon and, as expected, held steady on interest rates. However, the Fed opened the possibility of a rate hike in September, noting that “near-term risks to the economic outlook have diminished.”

After expressing some jitters about the pace of economic growth earlier in the year, policy makers were encouraged by recent data pointing to a resilient U.S. jobs market and stronger housing.

The vote to keep interest rates at 0.25 percent was 9-1, with Kansas City Fed President Esther George dissenting in favor of a 0.25 percent increase.

“Information received since the Fed policy committee met in June indicates that the labor market strengthened and that economic activity has been expanding at a moderate rate,” the Fed said.

Business investment remained “soft,” but U.S. economy has thus far withstood the UK’s shock Brexit vote and political uncertainties related to the Trump-Clinton showdown.

New orders for U.S. manufactured durable goods fell by much more than expected in the month of June, according to a report released by the Commerce Department on Wednesday. The report said durable goods orders tumbled by 4.0 percent in June following a revised 2.8 percent decrease in May.

Economists had expected durable goods orders to dip by 1.3 percent compared to the 2.2 percent decline originally reported for the previous month.

Pending home sales in the U.S. rose by much less than expected in the month of June, the National Association of Realtors revealed in a report on Wednesday. NAR said its pending home sales index edged up by 0.2 percent to 111.0 in June after tumbling by 3.7 percent to 110.8 in May. Economists had expected the index to jump by 1.3 percent.

The dollar initially jumped to around $1.0960 against the Euro following the Fed announcement, but has since retreated to around $1.0990.

German consumer confidence is set to fall in August as economic and income expectations deteriorated after Britons voted to exit the European Union. The forward-looking consumer climate index dropped to 10.0 points in August from 10.1 points in July, survey results from the market research group GfK showed Wednesday.

Germany’s import prices declined at the slowest pace in five months in June, data from Destatis showed Wednesday. Import prices dropped 4.6 percent year-on-year in June, slower than the 5.5 percent decrease in May. This was the slowest fall since January, when prices decreased 3.8 percent. Economists had forecast a 4.6 percent fall for June.

At the same time, export prices declined 1.3 percent versus a 1.6 percent fall in May.

France’s consumer confidence weakened for a second successive month in July, as households’ unemployment worries increased, figures from INSEE showed Wednesday. The survey was conducted between June 28 and July 16 and only 2 percent of participants responded after the July 14 terrorist attack in Nice, the agency said.

The consumer confidence index dropped to 96 from 97 in June, in line with economists’ expectations.

French producer prices in the domestic market increased in June, the statistical office Insee reported Wednesday. In the domestic market, producer prices climbed 0.4 percent on month, the same pace of increase as seen in May.

The buck has dropped to around $1.3150 against the pound sterling this afternoon, from an early high of $1.3070.

The U.K. economy grew at a faster pace in the second quarter, weathering the uncertainty stemming from the run-up to the EU referendum. Gross domestic product expanded 0.6 percent in the three months to June from the previous quarter, preliminary estimates from the Office for National Statistics showed Wednesday.

This was faster than the 0.5 percent growth forecast by economists and 0.4 percent expansion seen in the first quarter.

U.K. retail sales declined more rapidly than at any time since January 2012 as consumer confidence weakened following the EU referendum, the latest monthly Distributive Trades Survey from the Confederation of British Industry showed Wednesday.

The retail sales balance fell to -14 percent in July from a moderate growth of +4 percent in June. The balance is forecast to drop to -12 percent in August.

Japanese Prime Minister Shinzo Abe on Wednesday said his government is set to unveil a stimulus package of more than 28 trillion yen ($266 billion) to boost the sluggish economy that is witnessing fragile growth and hardly any inflation.

Meanwhile, the Bank of Japan is set to begin its two-day policy session on Thursday, following which the bank is widely expected to announce further monetary easing on Friday.

The greenback has risen to around Y105.650 against the Japanese Yen this afternoon, from a low of Y104.810 this morning.

Confidence among Japan’s small and medium-sized enterprises improved for the second straight month in July, survey figures released by the Shoko Chukin Bank showed Wednesday. The small business confidence index rose to 47.8 in July from 46.5 in the previous month. In May, the score was 45.6.

The material has been provided by InstaForex Company –

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EURUSD 1.23500 1.23520 2
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GBPUSD 1.42010 1.42040 3
  Symbol Bid Ask Spread
USDJPY 107.400 107.420 2
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EURGBP 0.86950 0.86980 3
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EURCHF 1.19900 1.19930 3

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