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Dollar Weakens On Lack Of Hint On September Fed Hike

Published 07/28/2016, 05:21 AM
Updated 03/09/2019, 08:30 AM

Dollar weakened broadly after Fed left policies unchanged overnight as markets are dissatisfied with the lack of direct hint on a September rate hike. The dollar index is now trading at around 96.6 comparing to yesterday's spike high of 97.53. EUR/USD's break of 1.1059 minor resistance suggests that recent consolidation from 1.0911 is going to extend with another rise. Meanwhile, USD/CHF also lost moment momentum ahead of key near term resistance at 0.9955 and the pair could be topping in near term. Elsewhere, gold jumps on dollar weakness and is back pressing 1340 after dipping to 1310.7 last week. Crude oil stays soft at 42 and recent decline is still in progress for 40 handle. US stock indices ended nearly flat while Asian equities are trading soft with Nikkei losing -0.7% at the time of writing.

FOMC maintained federal funds rate unchanged at 0.25-0.50% as widely expected. Esther George was the sole dissenter voting for a 25bps hike. The accompanying statement noted "strong" job gains in June and "payrolls and other labor market indicators point to some increase in labor utilization in recent months." Meanwhile "longer-term inflation expectations are little changed". Also, Fed noted that "near-term risks to the economic outlook have diminished." And the overall outlook is largely unchanged. The focus will turn to non-farm payroll on August 5, Fed chair Janet Yellen's speech at the annual Jackson Hole symposium and FOMC minutes to be released next month.

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Elsewhere, Australia import price index dropped -1.0% qoq in Q2 versus expectation of 1.6% qoq rise. German unemployment, CPI and Eurozone confidence indicators will be released in European session. US will release trade balance and jobless claims later today.

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