The greenback is still looking well underpinned by the preliminary release of Q2 GDP which has shown that the Americans have not canceled their businesses but they have just delayed them to later time because of the bad weather in Q1 to see growth by 4% in Q2 while the market was waiting for 3% after shrinking by 2.9% has been revised to 2.1%.
The Fed decided as expected to taper again in QE month scale by $10b referring to the need of boosting jobs demand further despite the progress which has been achieved. The Fed has changed its language about the current inflation upside risks saying that it has been just less worried about the low inflation level.
The FOMC Member Plosser has dissented this message which came following the bullish Q2 GDP figure saying it ignored the current considerable economic improvement and it is not suitable forward guidance.
The Fed President of Philadelphia Charles Plosser had demonstrated before that the Fed is closer to hiking the interest rate than many others are anticipating telling also that the delaying of taking such appropriate tightening step can lower the Fed’s creditability.
The Fed has tried to tell in the same time that there are no worries about the economy as before but that was not enough for USD to rise further to come again under pressure by the end of the US session, after this message which has shown maintaining of the stance of wait and see which looked not suitable any more for many market participants who were waiting for reference to a tightening step or at least higher appreciation of the economic progress.
Kind Regards
FX Market Strategist
Walid Salah El Din
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