Article Highlights

  • CA wholesale sales: -3.1% vs. -0.8% expected, 2.8% previous
  • Fed drops “patience” from statement, but is dovish on growth and inflation forecasts
  • USD tumbles across the board on slightly dovish Fed release
  • NZ quarterly GDP 0.8% as expected vs. 0.9% previous
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We expected the FOMC statement to move currencies around, but forex traders probably didn’t see just how much movement we’ll get!

The dollar was front and center during the U.S. session as traders priced in the Fed’s latest statement. Though the central bank removed the term “patience” when referring to waiting for rate hikes, it also said that it’s expecting inflation to decline further, and that economic growth has “moderated somewhat.” Last but definitely not the least, the Fed ruled out a rate hike in April although it didn’t close the door on rate hikes in the next months.

Traders must have focused on the Fed’s projections, because the dollar got sold off across the board. EUR/USD ended the session a whopping 236 higher (+2.23%) than its open price at 1.0838 while GBP/USD also rocketed by 310 pips (+0.2.13%) to 1.4948.

Similar stories were seen in other dollar pairs. USD/JPY started dropping below the 121.00 handle but the bears gained momentum on the FOMC release and dragged the pair 109 pips lower (-0.9%) to 120.07. Heck, even USD/CHF fell by 252 pips (2.51%) to .9786!

Another story of note is Canada printing much weaker-than-expected wholesale sales data. Luckily for the Loonie, the Fed’s dovish statement boosted oil prices, weighed on the Greenback, and took attention away from the oil-related currency.

USD/CAD dropped by a sharp 237 pips (-1.85%) to 1.2568 while CAD/JPY jumped by 92 pips (+0.97%) to 95.54. The Fed’s impact could also be seen in other comdoll price action with AUD/USD rising by 178 pips (+2.35%) to .7787 and NZD/USD shooting 175 pips higher (+2.39%) to .7491.

Forex traders during the Asian session don’t have much to price in save for New Zealand’s quarterly GDP printed a couple of hours back. The RBA has also released its bulletin but so far has not affected the Aussie’s prices much.

With little or no new catalysts for the major currencies, watch out for possible extension of yesterday’s moves.

Good luck!

See also:

London Session Recap

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