Dollar wavers after mild Fed interest rate decision
The US dollar was little changed as traders reacted to the Fed interest rate decision yesterday. In its decision, the bank left interest rates unchanged and warned that COVID-19 resurgence threatened the overall economic recovery. The bank also left the open-ended quantitative easing program unchanged and promised to do more to support the economy. It will also extend the emergency swap lines with some central banks to ensure that the currency was readily available to them. He said:
“We are committed to using our full range of tools to support our economy in this challenging environment.”
The Australian dollar declined slightly as traders reacted to weak economic data from the country. Data from the statistics office showed that private house approvals declined by 5.7% in the second quarter after falling by 4.4% in the first quarter. Other data showed that the import price index declined by 1.9% in the second quarter while the export price index declined by 2.4%. Meanwhile, building approvals fell by 4.9% in the quarter. In New Zealand, building consents increased by 0.5% in June after rising by 41.7% in the previous month.
The economic calendar will have some important data today. In Germany, the statistics office will release the unemployment data for July. Analysts expect that the rate increased from 6.4% to 6.5%. The office will also release the preliminary GDP data from the country. In the Eurozone, the European Commission will release the services, industrial, and consumer sentiment data. Later today, in the US, the Bureau of Labour Statistics (BLS) will release the initial jobless claims data. We will be watching these numbers to see whether the number of Americans filing for benefits is rising. The bureau will also release the preliminary reading of US GDP.
The EUR/USD pair is trading at 1.1775, which is a few pips below yesterday’s high of 1.1805. On the four-hour chart, the price is above the 50-day and 100-day exponential moving averages while the RSI is at the overbought level of 70. Also, it has moved above the bullish pennant pattern that was forming two days ago. The pair is likely to continue moving upwards to 1.1850, which is the next important psychological level.
The GBP/USD pair is little changed at 1.2978, which is slightly below yesterday’s high of 1.3010. On the four-hour chart, the accumulation and distribution indicator has moved to the highest level since April this year. The signal and main lines of the MACD have also been rising. Further, the price is above the short and medium-term moving averages. Therefore, it is likely that the price will continue rising as bulls attempt the next resistance level at 1.3050.
The AUD/USD pair was little changed during the Asian session. The pair is trading at 0.7176, which is the highest it has been since July 22. On the four-hour chart, the price is above the 50-day and 100-day EMAs. The price’s upward momentum has waned while the RSI has remained below the overbought level of 70. Therefore, the pair is likely to remain within this narrow range today.