Yesterday the financial markets were expecting the FED to be somewhat hawkish. Bond yields showed exactly that by putting up a strong rally.
It didn´t last long though, the bond rally turned upside-down and five-year yields are back where they started, around 1.82%.
The statement was more dovish than the markets were expecting, or at least not as hawkish.
In the last FOMC statement, it was mentioned that “inflation had somehow slowed”. This time, they dropped “somewhat”, which means that they´re more convinced that inflation has slowed.
That was the biggest reason for the USD decline yesterday. The Buck lost around 100 pips yesterday and the decline stretched for another 50 pips early this morning, which was the last straw for our long term AUD/USD sell forex signal.
Losing that trade feels horrible, especially when we once were more than 100 pips in profit. Who knew the USD would turn out to be the weakest of all majors?
Anyhow, life continues and we must look forward to new trade opportunities.
So, the USD was beaten up again yesterday, but I think that this is it for now. Now the market will concentrate on the upcoming economic data from the US and of course, inflation will be the main attraction.
The FED is the most hawkish central bank since they´re the only ones who have been hiking interest rates, besides for the BOC (Bank of Canada) which increased rates for the first time in the last meeting. So, I don´t see the USD going down much further in the near future.
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