US dollar index erases daily gains after FOMC statement

The US dollar fell across the board following the decision of the Federal Reserve to keep rates unchained at the 0.50% - 0.75% range. The tone of the statement, that showed no major changes, pushed the greenback to the downside in the market.  Equity prices on Wall Street initially rose after the decision but then turned lower, while gold prices recovered lost ground on the back of the decline of the USD. 

The US Dollar index, which gauges the US dollar against its main competitors, is up just 0.10% for the day. Before the release of the FOMC statement, was hovering around the 100.00 handle and then dropped toward 99.50. It remains around 99.60, holding a bearish tone. 

USD: up on data, down on Fed

Stronger-than-expected US data boosted the USD before the Fed, but then it lost momentum and pulled back trimming most of day’s gains after the Fed. Still, the US dollar index remains above the 99.50 support area. 

“There was little fresh news in the statement - risks are still seen "roughly balanced", activity is expected to expand at a "moderate pace" and that warrants "only gradual increases" in rates”, said analysts from Westpac. They added, “there are no strong clues here that the Fed is agitating to hike in March”.

The next key event for the US dollar will be on Friday, with the release of the Non-farm payroll report. Today’s ADP private employment data surprised to the upside, showing a solid increase of 246K, the highest since June. 

FOMC: A virtual non-event - ING