FX Roundup: Dollar trades lower following FOMC teaser

The dollar traded lower against major currencies on Thursday, after the US Federal Reserve decided to keep interest rates unchanged overnight at 0.25% in line with market expectations, but left the door open to an increase in December.

At the conclusion of its two-day Federal Open Market Committee (FOMC) meeting on Wednesday, the central bank also downplayed global economic headwinds in its statement on the policy decision, saying that it was monitoring developments abroad.

In response, the pound was up 0.26% against the greenback, exchanging at $1.5303 at 1706 GMT, while the euro was up 0.34% changing hands at €1.0960.

Kit Juckes, head of forex at Societe Generale, said, “The Fed has left the door ajar albeit with a data-conditional safety latch. They've hawked it up a bit, opening the door for a December hike as long as conditions are right.

“But it is a data-dependent door. This is dollar friendly and risk negative just because the market was looking for something more dovish after durables, after new home sales and the drop in oil prices.”

Meanwhile, the greenback was broadly flat against the yen, up a mere 0.07%, changing hands at JPY121.17. Jane Foley, senior FX strategist at Rabobank, said, “There is plenty of talk in the market that the Bank of Japan needs to increase policy stimulus in order to achieve its 2% inflation target.

“However, the commentary from the BoJ appears to suggest that the chances of a move at Friday’s meeting are limited.”

Elsewhere, some commodities-linked currencies failed to get respite as the New Zealand dollar fell 0.21% against the greenback to change hands at US$0.6688, while the Australian dollar fell 0.52% changing hands at US$0.7078.

In the Americas, the dollar traded lower against the Canadian dollar (down 0.18%), Brazilian real (down 1.06%) and the Mexican peso (down 0.25%) but rose against the Chilean peso (up 0.38%).