The greenback suffered on Wednesday after a slightly dovish tone in the U.S Federal Reserve’s Federal Open Market Committee Statement; the Fed voted to leave benchmark rates unchanged at 1.00-1.25% on Wednesday.
The Open Market Committee statements showed that policymakers were slightly concerned in regards to the recent sluggish inflation pace, which remains under the Fed reserve target of 2%.
Furthermore, Inflation data had disappointed expectations for four consecutive months which caused concerns among policy makers and caused investors to become skeptical of a further rate hike. Thus weighing heavily on the U.S dollar.
The Fed also hinted that it would start unwinding its $4.5 trillion dollar balance sheet “relatively soon” which economist believe would start in September.
The dollar and treasury yield both tumbled after the FOMC meeting, as investors and market participant considered the Fed as dovish on inflation.
The greenback edged higher for the second consecutive session on Tuesday; the dollar found support from better than expected consumer sentiment to indicate the strength of the U.S economy. However upbeat economic data was overshadowed by the Fed’s upcoming two-day monetary policy meeting starting on Wednesday.
Regarding economic data, New Home Sales in the United States came at 610K compared to previous month sales of 605K.
The US Dollar Index, which measures the strength of the US Dollar against a basket of major currencies tumbles to close in negative territory on Wednesday. Trading near 13-month lows the dollar index dropped by 0.64% to trade at 93.45 at the close.
Elsewhere in Great Britain, the sterling pound surged after the dollar tumbled amid dovish remarks in the FOMC statement. The GBP/USD add 0.73% to trade near eight-day highs at 1.3120 at the close.
Meanwhile, the European Euro ended Wednesday’s session in positive territories versus the dollar to trade 2-year highs after finding support from the weakness in greenback; the EUR/USD advanced by 0.74% to settle at new a high of 1.1733.
Furthermore, in Japan, the Japanese Yen gained some of the lost ground on Wednesday, the Yen outmuscled the greenback amid weakness in the U.S dollar after the FOMC statement indicated concerns regarding inflation in the U.S. The USD/JPY lost 0.64% to end the session at 111.17.
Meanwhile, Commodity Based currencies ended Wednesday's session in the green as the Aussie dollar gained for the third consecutive trading session, and Kiwi dollar bolstered to trade above 24-month highs. The AUD/USD increased by a margin 0.85% to trade above 2-year highs at 0.8004, on the other hand, New Zealand Dollar hit new highs trade above 24-month highs; The NZD/USD surged by 1.36% to end the session at 0.7518.
Over in Canda, the loonie dollar continued to advance, on Wednesday the loonie marked its seventh session in green. The loonie found support from rising oil price, a major Canadian export; The USD/CAD ended the down by a margin of 0.52% to settle at 1.2444 at the close.
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