USD under pressure following Fed meeting
Yesterday, the main pairs were confined to relatively tight ranges throughout the day as traders waited for the US Fed meeting after the EU close. Of the limited moves to register, the euro remained on the defensive. The single currency was down by 0.3% against the dollar and sterling at the European close.
Overnight though, following the post-meeting Fed press conference, the dollar was on the back-foot. As expected, the Fed hiked rates by 75bps for the second consecutive meeting. However, Chair Powell refused to offer specific guidance on the pace of future rate hikes. Furthermore, the Fed noted that “spending and production have softened”. The market provided a dovish reaction to the meeting, although the Fed is expected to continue hiking rates into the end of this year at the least.
As we get underway this morning, EUR/USD opens up above $1.02, GBP/USD is changing hands in the upper half of the $1.21-1.22 range and EUR/GBP is operating at the 84p mark.
Looking to the day ahead, the main highlight will be the first reading of Q2 GDP in the US. The consensus is for a 0.5% increase in the quarter, although there are some downside risks to the forecast. In the Eurozone, the EC sentiment indices are expected to deteriorate in July, while German HICP is projected to ease slightly to 8.1% in July from 8.2% previously.