The dollar currency shows the different movement for this time. It is because the Fed’s announcement that is in line with the expectation of various parties and investors. It is a brand new situation after the USD weakened sometimes ago.
The US Federal Reserve holds a monetary policy meeting. However, the meeting was unable to impress investors. Powell confirmed in his statement that the latest framework shifted to the current average inflation target. It can be good news or even the bad ones.
The new estimate shows that the FOMC expects GDP to contract by 3.7% at a slower pace than previously estimated. The previous estimate was 6.5% in 2020. It is also based on the unemployment rate of 7.6% at the end of the year.
Interest Rates from the Fed
The unemployment rate would have fallen compared to the 9.3% projection in June. On the other hand, Fed interest rates are unchanged for this year and the following year. Meanwhile, inflation was revised down for this year to 1.0% from 1.5%.
US policymakers say they are very open to adjusting monetary policy further according to current market needs. However, they still suggested that they would remain on hiatus for the current period. It becomes the attention of several investors in the market.
The interest rate from the Fed will of course be monitored by many investors because it can affect several major currencies on the market. However, the statement from the Fed seems to be exactly what many imagined. In fact, this is good for the USD.
The dollar strengthened slightly at the end of the day. Of course, this is important progress after previously the currency has decreased. However, there were no notable developments overall, except for EUR / USD which fell below the 1.1800 marks instead.
GBP/USD Shows Up
GBP/USD surged to 1.3000 and at the end of the day was around 1.2960. This situation comes amid reports the UK offers tentative concessions on fisheries in trade talks with the EU. This discussion is certainly very interesting to listen to.
In the meeting, that was one of the main issues that hindered negotiations in recent months. Pound bulls are in a state of ignoring the Fed. Focus now shifts to the BOE's monetary policy announcement due on Thursday morning.
Yoshihide Suga has been confirmed by the Japanese Parliament as the country's new Prime Minister. He is expected to follow in the footsteps of Abe who previously served in the same position. This move is predicted to calm the market, at least on the front lines.
Meanwhile, the USD / JPY currency fell below 105.00 and maintained its bearish stance towards the Asian open. Several other commodities have reportedly declined. This includes major commodities in markets such as gold. Of course, this is a special concern for investors.
Commodity Prices of Gold and Oil in the Market
Gold prices fell with the Fed. This occurs amidst no more stimuli expected in the near future. Gold was trading around 1,955 at the end of the day. This data was obtained on market conditions about one day ago after it has risen before.
The price of crude oil shows the opposite. One of these important commodities is showing a strengthening trend. Oil has found support at the EIA, which reported that US crude stockpiles fell by 4.4 million barrels last week. This is against the previously raised 1.3 million estimates.
In addition, Hurricane Sally forced the closure of more than 25% of existing oil production in the Gulf of Mexico. On the other hand, Australia will publish its employment data in August. Meanwhile, the BOJ is holding its monetary policy meeting Thursday morning.
