Dollar Mixed After Fed Leaves Rates Unchanged

The dollar is turning in a mixed performance Wednesday afternoon, following the release of the highly anticipated announcement from the Federal Reserve. The Federal Reserve made no change to monetary policy, a month after raising interest rates for the first time in nearly a decade.

The Fed’s unanimous decision was in line with market expectations. In keeping the benchmark interest rate near 0.25 percent, the Federal Open Market Committee acknowledged economic weakness overseas, particularly China, is a threat to the U.S. recovery.

They also said US “economic growth slowed” since its last meeting in December, and that inflation remains stubbornly low.

However, there was no specific mention of heavy recent losses on Wall Street.

Policy makers predict the economy will likely grow at a “moderate pace” moving forward.

Reflecting strength across most of the country, the Commerce Department released a report on Wednesday showing that new home sales in the U.S. increased by much more than expected in the month of December.

The report said new home sales jumped 10.8 percent to an annual rate of 544,000 in December from the revised November rate of 491,000. Economists had expected new home sales to climb 2 percent to a rate of 500,000 from the 490,000 originally reported for the previous month.

The dollar hit a session low of $1.0913 against the Euro after the Fed announcement, but has since bounced back to around $1.0885.

German consumer confidence is set to remain unchanged at an elevated level in February as heightened terror threat and refugee crisis have not yet had a lasting effect on sentiment, survey results from GfK showed Wednesday.

The forward-looking GfK Consumer Confidence Index showed a score of 9.4 points for February, unchanged from January, the Nuremberg-based market research group GfK said Wednesday. Economists had expected slight easing to 9.3 points.

French consumer confidence unexpectedly increased at the start of the year as intentions to make big purchases strengthened, standard of living expectations increased, while fears of unemployment sharply decreased. The consumer confidence index rose to 97 from 96, figures from INSEE showed Wednesday. Economists had expected the score to remain unchanged.

The buck has climbed to around $1.4260 against the pound sterling Wednesday afternoon, from around $1.4340 this morning.

U.K. mortgage approvals declined unexpectedly to a 7-month low in December, the British Bankers’ Association reported Wednesday. The number of mortgages approved in December fell to 43,975 from 44,533 in November. It was the lowest since May, when it totaled 42,945. It was forecast to rise to 45,500.

U.K. house prices increased at a slower pace in January, data from the Nationwide Building Society showed Wednesday. House prices climbed 4.4 percent year-on-year in January, slightly slower than a 4.5 percent rise in December. Economists had forecast the annual growth to accelerate to 4.6 percent.

The greenback climbed to a high of Y119.064 against the Japanese Yen this afternoon, but has eased back to around Y118.825.

Confidence among Japan’s small and medium-sized enterprises weakened for the second straight month in January to the lowest level in seven months, survey figures released by the Shoko Chukin Bank showed Wednesday.

The small business confidence index dropped to 47.2 in January from 48.3 in December. In November, the reading was 49.9. The latest score was the weakest since June 2015.

The material has been provided by InstaForex Company – www.instaforex.com

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