MUFG with a solid take on AUD:
USD continues to correct lower as Fed fails to deliver another hawkish surprise29thJuly2021USD: Gradual QE taper plans encourage further correction lower for USD
The US dollar has continued to correct lower following last night’s FOMC meeting with the dollar index falling further below the intra-day high of 93.191 recorded on 21st July. After moving back within touching distance of the year to date high from the end of March at 93.437, the US dollar has lost upward momentum over the past week. Last night’s FOMC meeting failed to provide the fresh bullish trigger required to regain upward momentum in the near-term. The Fed’s latest policy update was largely in line with expectations. The updated policy statement signalled that the Fed is moving closer to tapering QE by acknowledging that the US economy has made“progress” towards their goals, and that the FOMC will continue to assess progress in the coming meetings. The Fed has been encouraged that indicators of economic activity and employment have continued to strengthen. Sectors of the economy most adversely affected by the pandemic have shown improvement but have not yet fully recovered. However despite the progress, Fed Chair Powell reiterated that “we’re notthere yet and we see ourselves as having some ground to cover to get there”.
