What happened yesterday at the FED? - Forex News by FX Leaders

What happened yesterday at the FED?

Posted Thursday, July 28, 2016 by
Skerdian Meta • 1 min read

The FED (Federal Reserve) held their 6-week meeting yesterday in the evening. They kept the interest rates unchanged at the 0.25-0.50% range, as it was widely expected. So, the attention shifted to the FOMC statement. The statement contained some positive comments such as the labor market has strengthened and the wages have increased. On top of that, they added that the near-term risks to the economic outlook have diminished. They are referring to the global risks which were eminent from February on.    

AUD/USD jumped about 120 pips after making a quick dip after the FOMC statement

That increased the odds of an interest rate hike this year. The odds of a September interest rate hike jumped from 25% to 33% and the odds of a December hike reached 53% from 47%. The USD had a short lived rally which helped our EUR/USD sell forex signal reach the take profit level. But then it all reversed. As of this morning, the USD lost about 130-160 pips across the board. So, what do you make of this as a forex trader? Hint, market sentiment.

That´s pure market sentiment in my opinion because the forex market has been long on USD for a few months now and particularly since the Brexit vote. Now the forex traders/investors want to catch their breath and reassess their forex trades. The odds of an interest rate hike did increase but nothing is certain, no clear message. So, better close the USD long positions and wait for a better price to open other USD long positions.  

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