The Federal Reserve played a completely straight bat through the release of the FOMC statement overnight. Markets may have been expecting a little more comment following the last couple of weeks of political drama and the statement itself only changed two areas from the last release with the housing market identified as slowing and removing tighter financial conditions comment. The market viewed the release as balanced with the Fed really giving itself plenty of options after it kept with the purchases remaining at 85 billion per month. The US dollar really strengthened with a lack of dovish sentiment in the release with the Australian dollar down more than half a cent to 94.41 US cents in the ensuing minutes.
The US dollar had been a little softer in the lead in to the meeting against the major crosses as economic data failed to inspire. Firstly ADP non-farm payrolls drop to 130,000 new jobs which was below expectations and core CPI remained at 0.1% also below expectation. The Euro and Pound had both picked up about 40 pips versus the Greenback through to the FOMC release before they both shed 70 odd pips following.
The New Zealand dollar has been in focus of trade this morning as the RBNZ left rates on hold at 2.5% with expectations remaining for at early 2014 rise tempered with Wheeler signalling that they may push back the next move due to the high NZ dollar. The Australian dollar itself has firmed through this morning to 1.1485 NZD.
Joel Murphy
www.pepperstone.com Joel Murphy is a currency analyst and market commentator for Forex Broker Pepperstone and he regularly features on Sky Business News Australia. He has worked in both retail and institutional Forex for last 8 years and completed a Bachelor of Commerce and a Bachelor of Arts from Monash University
