THE US dollar weakened against broad currencies as the FOMC remained on hold with cautious US data added to the tone. The Fed funds rate was left on hold and the “dot plot” projections were lowered by 25 basis points across the board. However, the Fed is still keen on imminently lifting the fed funds rate, with Yellen specifically mentioning that October was a possibility and that they expected to start hiking this year.
The euro appreciated against US dollar supported by US Federal Reserves’ decision to leave the range for the Fed Funds rate unchanged and positive euro data. The euro zone trade surplus for July widened to 22.4 billion euros, the second highest monthly surplus on record, on the back of strong exports.
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