Daily FX Market Roundup 09.17.15

Investors sold U.S. dollars after the Federal Reserve left interest rates unchanged today citing uncertainty abroad and slightly softer inflation as reasons for waiting. Their decision was NOT unanimous with Jeffrey Lacker breaking from the ranks to vote in favor of a 25bp rate hike. While the Fed passed on a rate hike in September, they are still thinking about raising interest rates this year. In fact 13 of the 17 members of the FOMC expect liftoff to begin in 2015. As such we believe that there should be further weakness in the greenback before a renewed rally going into the next monetary policy meeting.

Yellen made it clear that fundamentally their outlook has not changed and they still believe the U.S. economy is performing well even though dollar bulls were disappointed by the Fed’s decision to hold rates steady. They want to see further improvement in the labor market and hopefully inflation before raising interest rates. While the Federal Reserve boosted its forecast for 2015 growth they lowered their projections for 2016 and 2017 growth along with their projections for the unemployment rate, inflation and Fed Funds rate.

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