Fed keeps the faith

The dollar is trading on the backfoot this morning after the FOMC was deemed as being dovish.

As expected, asset purchases were reduced by $10bn per month as the Fed lowered the 2014 GDP forecast from 2.8%-3% to 2.1%-2.3%, whilst leaving the 2015 estimate unchanged at 3%-3.2%.

Unemployment moved down to 6.05% from 6.2%. The FOMC seems to be looking at the economy as a glass half empty and not half full as they highlight and emphasise the weakness in growth – whilst ignoring the latest higher inflation reading, citing the increase as running below their long-term objective.

Fed Chair, Janet Yelle,n continued to stress that broader measures of slack remain in the labour market, with the overall message remaining the same that rates will stay low ‘for a considerable time’.

Following the BoE’s MPC minutes from the June meeting, we heard comments from two of the members, as both Martin Weale and Richard Haldane reiterate Carney’s sentiment, citing that chances of an early hike are marginally higher than a delayed one.

In New Zealand, GDP continues to impress, coming in up 1%, slightly below expectations of 1.1% and showing a strong construction component.

Today, attention will turn to the UK, with the English football team trying to avoid joining Spain on the plane home from Brazil as the latest retail data is released this morning.

Weekly jobless claims will be released from the US this afternoon.

EUR/USD

Supports 1.3580-1.3540-1.3500 | Resistance 1.3650-1.3700-1.3730

USD/JPY

Supports 101.55-101.10-100.75 | Resistance 102.35-102.50-102.85

GBP/USD

Supports 1.6935-1.6890-1.6850 | Resistance 1.7045-1.7100-1.7150