The dollar rallied strengthening against most of its peers today following the long awaited statement from the Federal Reserve which left interest rates unchanged, announcing that it was ending its monthly bond buying program due to the growing labor market. As the market was anticipating the Fed’s statement the dollar was weaker to steady during Asian and European trading sessions.
The pound strengthened and the euro held its ground close to a 1 week high against the dollar leading up to the Fed’s decision. It was widely agreed that the US central bank would calm market nerves in that raising its interest rate would be pushed back in order to prevent the lagging European and Chinese economies from adversely affecting US recovery. Germany is set to release data tomorrow on its consumer price index as well as its unemployment rate. Spain will release data on consumer inflation and 3rd quarter GDP.
The dollar traded lower against the yen as investors steered clear of the dollar leading up to the Fed’s announcement. The yen was virtually unaffected by data released before the Fed’s statement which showed that Japanese industrial production increased by 2.7% in September which was better than expectations.
With dollar demand diminishing leading up to the Fed’s statement both the Australian and New Zealand dollars were stronger than the dollar. The New Zealand dollar had been supported by favorable business confidence data released out of New Zealand. The Canadian, Australian and New Zealand dollars weakened against the dollar following the Fed’s announcement.
Updated data on 3rd quarter GDP is due to be released out of the US on Thursday including jobless claims weekly numbers. The market will also be focused on comments made by Federal Reserve Chair Janet Yellen who is due to speak at a function in Washington.
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