Forex Analysis for Thursday 27th July 2017
UK Prelim GDP was on target at 0.3%.
– FOMC held rates between 1.00-1.25%, as expected and said balance sheet normalisation is to take place ‘relatively soon’.
– On inflation, the Fed said it is monitoring inflation developments closely and that inflation will remain somewhat below 2% in the near term, but stabilise around 2% in medium-term.
– Although there was no major immediate reaction, the USD softened in the following minutes, with all of the major FX pairs moving to best levels on the day against the USD, with focus on the inflation comments.
The USD dropped on the percieved dovish tone on inflation. US equities continue to grind upwards. Oil holds Tuesday’s gains and gold hits a 6 week high on the softening USD. US 10 Year yield falls on the dovish Fed. The EUR, JPY remain range-bound as the GBP grinds upwards for the third consecutive day.
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