The Federal Reserve shocked the Forex market today as it made no changes to its monetary policy, avoiding stimulus tampering that everybody was expecting. The dollar came crashing down as a result.
The most important event this week (or perhaps even this month) has occurred today: the Federal Open Market Committee meeting. Most market participants believed that some form of quantitative easing reduction will be announced by the FOMC. Therefore it was a shock to see no changes to the monetary policy.
The Committee said in the statement:
The Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month.
It means that the total size of assert purchases remains at $85 billion per month. Moreover, the 6.5 percent unemployment threshold remained unchanged. On top of that, the FOMC revised its economic growth projections down.
EUR/USD surged from 1.3357 to 1.3512 as of 21:33 GMT today and its intraday high of 1.3540 was strongest since February 7. GBP/USD jumped from 1.5901 to 1.6135, trading near the highest since January 14. USD/JPY sank from 99.10 to 98.06.
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