USD lower after Fed
The US Federal Reserve raised interest rates by 25 basis points overnight but refused to give any guidance about its next steps instead returning to the position that the US central bank was “data dependant”.
After skipping an increase in June, the Fed hiked rates to a new range of 5.25% to 5.50% — the highest level in 22 years.
The Fed upgraded its view on the US economy, from “modest” to “moderate” and continued to indicate that high inflation and an easing of financial conditions could require further rate hikes.
Aussie hit by CPI numbers
The US dollar was mostly weaker as the currency gave back some recent gains.
The EUR/USD gained 0.2% while the GBP/USD gained 0.3%.
The USD/JPY fell 0.5%.
The Australian dollar was weaker, however, after a larger than expected drop in local inflation.
Headline annual inflation fell from 7.0% in the March quarter to 6.0% in the June quarter. The lower inflation reading saw expectations for a Reserve Bank of Australia rate hike next week fall from 55% at the start of the week to 25% after the CPI release
ECB due
Tonight, all eyes are on the European Central Bank, with the ECB widely expected to raise rates by 25 basis points.
Like the Fed, markets believe the ECB is nearing an end to its rate hiking cycle, with growth across the Eurozone flagging. Germany, for example, fell into a technical recession in the March quarter.
Tomorrow, central banks remain in focus, with the Bank of Japan decision due.
Greenback lower after Fed
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Calendar: 24 – 29 July
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
