Article / 17 September 2015 at 22:53 GMT

US Market Wrap: Dollar dives on dovish FOMC statement, EURUSD soars

FX Trade Strategist / www.Loonieviews.net
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Watchlist:

  •  AUD: Reserve Bank of Australia Governor Stevens speech      2330 GMT
  •  Japan: Bank of Japan Monetary Policy meeting minutes          2350 GMT

US Data released

  • Initial Jobless Claims (Actual 264,000 vs. forecast 275,000)
  • August Housing Starts (Actual 1.126 million vs. forecast 1.170 million)


The Federal Reserve Open Market Committee (FOMC) surprised traders (or at least half of them, when it chose to leave interest rates unchanged, and delivered a rather dovish statement. The US dollar tanked on the news although initial gains in the commodity bloc of currencies were quickly erased. The big winner was the EURUSD, which has gained 1.15% since lunch time in New York.

During the morning, US data failed to garner any trading enthusiasm due to the looming spectre of the FOMC meeting. As it was, the housing report had a soft tilt with a hefty downward revision to the July result.

WTI crude oil prices had a volatile day within a $46.50-$47.50/barrel trading range, testing both sides more than once and finally closing on the day almost exactly in the middle of the range. It will be interesting to see if Janet Yellen's expressed concerns about the Chinese economic slowdown translate into lower crude prices.

US equity indices were slightly lower at the close, with the exception of the NASDAQ, which was slightly above flat.

Opinions:

More than a few people believe that the FOMC got it wrong, including Saxo Bank chief economist Steen Jakobsen. See: Fed fluffs lines to beat path to US recession in Q1


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China leads, markets follow ... Janet Yellen's concerns about China's slowdown could translate into lower crude oil prices. Photo: iStock

 


– Edited by Robert Ryan

Michael O'Neill is an FX consultant at IFXA Ltd. Follow Mike or post your comment below to engage with Saxo Bank's social trading platform.

Missed a day? Here’s what we had to say during our Asian session and our regular European Morning Markets and From the Floor analyses

4y
John Shaw John  Shaw
The US is in a lot of trouble. A lot. More than the average person realizes. They cannot raise rates without doing a great deal of damage nor can they prepare for the next down turn ( already knocking on the front door ) with any amount of dry powder to fight the fight. i.e. - getting rates back up to 4 or 5 % so they can lower them later to "stimulate".
The "leader" of the USA right now is a total disaster at the very best. So lets look ahead for the next 4 year option. Billary. Sanders. Warren. Powder Puff Joe. Trump. Bush. Carson. .......
See what I mean.
Have fun.
4y
Hisham Boulos Hisham Boulos
Totally agree with you John, they brought it on themselves by not allowing the economy to take its normal course in free market, the kept it alive through dubious measures and money printing as I believe the Obama Administration didn't want to see a recession in its time and elected to path the puck for then next poor soul who will take over. The question is will this hammer the USD beyond expectations. This would have been a plausible scenario should the other economies of the world look healthy, but the fact is they all are sick some way or another due to the sickness in the world economy leader the US market.

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