Dollar hits 13-month low after Fed adjusts statement
The dollar fell on Wednesday, touching its lowest level in more than a year against a basket of currencies after the release of the Federal Reserve's policy statement following its July meeting.
The Federal Open Market Committee announced no changes to monetary policy, as expected. Policymakers said, however, that the U.S. central bank would begin implementing balance sheet normalization "relatively soon." That marked a change from the committee's previous statement that it would begin to reduce its $4.5 trillion bond holdings "this year."
"In our mind, 'relatively soon' is consistent with (a balance sheet reduction in) September, but there could’ve been a hope for stronger language or a more clear signal for September. Maybe the market sees September as somewhat of a question mark. We don’t. But ‘relatively soon’ could be open to some interpretation.
While the statement did seemingly set the Fed up to begin paring its balance sheet as soon as its next meeting in September, the lack of surprise allowed the market to revert to the trend of dollar weakness seen before the statement's release.
Once the statement was out of the way and didn’t really give any reasons to buy the dollar, the market tried to push for new highs in some of the other currencies.
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The Federal Open Market Committee announced no changes to monetary policy, as expected. Policymakers said, however, that the U.S. central bank would begin implementing balance sheet normalization "relatively soon." That marked a change from the committee's previous statement that it would begin to reduce its $4.5 trillion bond holdings "this year."
"In our mind, 'relatively soon' is consistent with (a balance sheet reduction in) September, but there could’ve been a hope for stronger language or a more clear signal for September. Maybe the market sees September as somewhat of a question mark. We don’t. But ‘relatively soon’ could be open to some interpretation.
While the statement did seemingly set the Fed up to begin paring its balance sheet as soon as its next meeting in September, the lack of surprise allowed the market to revert to the trend of dollar weakness seen before the statement's release.
Once the statement was out of the way and didn’t really give any reasons to buy the dollar, the market tried to push for new highs in some of the other currencies.
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