Fundamental Analysis 2017.07.27 – Fed Decision Impacts USD

The US dollar slipped against most other major currency after the Fed’s meeting yesterday. The decision Yellen and her board made was to keep interest rate at the current level of 1.25%, and well under their target of 2%, compounding this effect was the Fed’s statement saying it intends to reduce its balance sheet – further perturbing investors. As previously stated by Yellen - the FOMC intends to perform an increase of the interest rate gradually to avoid outpacing inflation and salaries, At the time of writing this article the USD drop is slowing, and there’s a possibility of a full reversal turning into a correction by the end of the trading day.
EUR/USD reached its 2015 high at 1.1775.

GBP/USD reached last year’s high at 1.3155 AUD/USD reached its 2015 level - 0.8060. The currency then slipped to 110.77, but and partially recovered to 110.00.

As expected in lieu of the USD volatility metals gained as risk aversion to the instability created by both not knowing the interest rate hike and reduction of the Fed’s balance sheet timeline. Gold saw levels reaching 1264.50, silver reached16.70, both of which are levels the metals trading at today.

Continuing the previous days’ trend Oil prices held without observable or significant fluctuation. Wednesday evening saw prices grow after EIA report on Crude Oil stocks, which a slip in stocks in the area of 7.2 million/barrel. Brent is currently at 51.20, WTI is currently around yesterday’s price of 48.60.

Stock markets experienced a slight influx:

FTSE100 -7456.5

CAC40 – 5192

DAX – 12293.0

DOW reached 21728.0

S&P500 – 2479.0

NQ – 5981.0

This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.

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