The dollar held its ground to higher against its peers overlooking a sudden decrease in US pending home sales data as the market looked towards the policy statement from the FOMC. US pending home sales index dropped 1.8% to a reading of 110.3 in June compounding forecasts for a 1.0% increase after 5 consecutive months of increases. However June’s reading was the 3rd highest for the year so far.
As was widely anticipated by the market the Federal Reserve left its key interest rate unchanged and did not provide any indications as to whether an increase will take place this fall which would be its first increase in almost 10 years. The US dollar index was trading steadily at 96.78 before the Fed’s statement after which it quickly recovered to 97.06 after declining shortly before the release.
The euro weakened against the dollar with the pair down 0.22% trading at 1.1034 below its 2 week high of 1.1128 set on Monday leading up to the Fed’s statement, having come off its session high of 1.1083 set earlier in the day. Minutes before the Fed’s release the euro rallied back close to the high to then decline to a new low of 1.1004.
The pound held its ground against the dollar on the back of solid UK lending data leading up to the Fed’s statement as the greenback was widely supported. The Bank of England released data which revealed that total net lending to individuals rose by 3.8 billion pounds in June beating expectations for an increase of 3.0 billion. Data also revealed that final mortgage approvals increased from 64,830 in May to 66,580 in June beating forecasts of an increase to 66,000.
The yen weakened against the dollar with the pair up 0.14% trading at 123.74 leading up to the Fed’s announcement having come off its session low of 123.33 reached earlier in the day. Minutes before the Fed’s release the pair came off roughly 30 pips to rally back to the day’s high of 123.99 after the release. The pair’s range today was still less than 1 big figure.
The Australian dollar weakened while the New Zealand dollar strengthened against the greenback leading up to the Fed. The Aussie was down 0.21% against the dollar with the pair trading at 0.7321 re-approaching its 6 year low of 0.7256 reached on Tuesday. Due to Australia’s heavy trading ties with China recent volatility in Chinese equity markets has put pressure on the Aussie. The kiwi was up 0.12% against the dollar with the pair trading at 0.6685. The kiwi had been supported by remarks from Reserve Bank of New Zealand Governor Wheeler which indicated that a weaker kiwi dollar would be more in line with its current economic climate. The loonie held its ground against the greenback with the pair trading steadily at 1.2926 leading up to the Fed.
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