- Federal Reserve keeps rates, bond purchases steady as expected.
- Dollar extends slide across the board, even as US yields remain steady.
The USD/JPY remained off highs following the release of the FOMC statement. The pair initially rose to 108.99 and then dropped to 108.79, as the US dollar weakened across the board.
In the statement released today at the end of the two-day FOMC meeting, the Fed kept interest rates and the purchase program unchanged, as expected. The central bank offered no hints about a tapering in the pace of its asset purchases.
Follow our live coverage of the FOMC decision and the market reaction.
Analysts at Capital Economics point out that “although it took a more upbeat tone as far as the economic outlook is concerned, and acknowledged that inflation has risen, the Fed offered no hints that it was considering slowing the pace of its asset purchases, let alone thinking about raising interest rates.”
After the statement, US yields printed fresh weekly highs, with the 10-year at 1.66%, but then pulled back to the level prior to the event. The greenback also reacted positively but only for a few minutes. After the initial impulse, the US Dollar turned to the downside, resuming the decline and hitting fresh lows across the board, with EUR/USD rising above 1.2100.
The USD/JPY is hovering around 108.80 as market participants await the press conference of Fed’s Chair Jerome Powell. The pair is still in positive territory for the day, off highs and at the mercy of bond yields.
