U.S. Dollar Falls As Fed Suggests Interest Rate Pause In 2020
December 11 2019 - 8:45PM
RTTF2
The U.S. dollar drifted lower against its most major
counterparts in the Asian session on Thursday, as the U.S. Federal
Reserve left interest rates unchanged and signaled that the
interest rates would remain on hold throughout 2020.
The Fed maintained the target range for the federal funds rate
at 1-1/2 to 1-3/4 percent following three straight quarter-point
reductions.
The Committee assessed that the current stance of monetary
policy is appropriate to support a sustained economic expansion,
strong labor market conditions, and inflation near its symmetric 2
percent objective.
Economic projections provided by the Fed along with the decision
show a majority of FOMC participants expect interest rates to
remain unchanged throughout 2020.
In his post-meeting press conference, Fed Chairman Jerome Powell
suggested he would not consider raising rates until inflation picks
up significantly.
Investors also looked ahead to developments on the U.S.-China
trade front as a fresh round of U.S. tariffs on Chinese goods are
set to kick in on December 15.
The greenback weakened to 0.9816 against the franc and held
steady thereafter. The pair had ended Wednesday's deals at
0.9829.
The greenback dropped to 1.1144 against the euro, compared to
Wednesday's closing value of 1.1129. The greenback is seen locating
support around the 1.14 region.
The greenback fell to 1.3230 against the pound, a level unseen
since March 25. The next likely support for the greenback is seen
around the 1.34 level.
Survey data from the Royal Institution of Chartered Surveyors
showed that UK house prices declined at the fastest pace since
April as uncertainties from Brexit and general election weighed on
the property market.
The house price balance fell to -12 in November from -5 in
October.
Reversing from a high of 1.3179 hit at 6:00 pm ET, the greenback
edged lower to 1.3163 against the loonie. On the downside, 1.30 is
possibly seen as the next support level for the greenback.
The greenback ticked down to 0.6889 against the aussie, from a
high of 0.6868 seen at 6:15 pm ET. The greenback may challenge
support around the 0.71 mark.
Although the U.S. currency dropped to a session's low of 108.46
against the yen, it recovered shortly. The USD/JPY pair rose to
108.61 and the next resistance level is seen at 111.00.
Data from the Cabinet Office showed that Japan core machine
orders fell a seasonally adjusted 6.0 percent on month in October -
coming in at 798.8 billion yen.
That missed forecasts for an increase of 0.7 percent following
the 2.9 percent decline in September.
Looking ahead, German consumer price index for November is
scheduled for release at 2:00 am ET.
At 2:30 am ET, Swiss producer and import prices for November are
due.
The Swiss National Bank's monetary policy announcement will be
out at 3:30 am ET. Economists widely expect the central bank to
maintain policy rate at -0.75 percent.
Eurozone industrial production for October is set for release in
the European session.
The European Central Bank will announce interest rate decision
at 7:45 am ET. The ECB is expected to hold its main refi rate at a
record low zero percent and the deposit rate at -0.50 percent.
Canada new housing price index for October, U.S. producer price
index for November and weekly jobless claims for the week ended
December 7 are due in the New York session.
Bank of Canada Governor Stephen Poloz will give a speech about
Canada's economic outlook for 2020 at the Empire Club of Canada in
Toronto at 12:30 pm ET.
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