Risk-on trading following FOMC meeting
A gauge of the US dollar fell 0.3% after the Fed’s meeting yesterday. Broad risk-on trading supported commodity-linked currencies, while safe haven currencies including the yen lagged. Today, the Bank of England released its decision to maintain interest rates at current levels.
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September 23, 2021
EUR/USD 1.1728 GBP/USD 1.3712 USD/CAD 1.2665 AUD/USD 0.7288 USD/JPY 110.09 USD/CNH 6.4610 USD/ILS 3.1992 USD/MXN 20.0423 USD/CHF 0.9237 USD/INR 73.64 USD/BRL 5.2985 USD/SGD 1.3482 USD/DKK 6.3395 USD/SEK 8.6460 USD/NOK 8.5855
Yesterday's highly anticipated FOMC meeting showed that the central bank will keep interest rates at current levels. Fed Chair Jerome Powell provided color on future monetary policy, suggesting that we could see tapering as early as November, dependent on the economy’s performance. The Fed's "dot plot" showed that an additional two members project a rate hike in 2022.GBP
Sterling rose 0.4% ahead of today's Bank of England decision. The British pound remained supported following BOE's decision to keep rates unchanged. The central bank warned that it may double its target for inflation by the end of this year.EUR
EUR/USD rebounded from Wednesday's low, just under $1.17 and near the low of the year at $1.1675. The currency pair is up 0.3% today on broad risk-on sentiment.CAD
USD/CAD is trading more than 100 pips lower this morning following yesterday’s FOMC announcement. Commentary from the Fed provided clarity that while the central bank is committed to tapering in the next few months, a rate hike is not expected in the near future. Markets moved towards risk-on sentiment supporting currencies like the Canadian dollar.ASIA/PACIFIC
USD/JPY is trading slightly higher as markets in Japan are closed today for a holiday. The Japanese yen is lagging while commodity-linked currencies advance amidst renewed risk appetite.
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