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Greenback makes gains after Federal Reserve meeting

USD - United States Dollar

The US dollar strengthened against most currencies one day after the Federal Reserve meeting concluded with a cautious statement on economic growth.

Federal Reserve Chairman Jerome Powell last night said that he expected interest rates in the US to remain ultra-low until 2022. The Fed will continue to purchase treasuries and mortgage backed securities at its current pace of $45bn and $80bn per month respectively. In addition, it also forecast that inflation will struggle to break 1.6% by 2021. Unemployment levels will flatten out at a whopping 6.5%, double the pre-covid level.

Following the meeting, the US dollar, Swiss franc and Japanese yen gained the most of the traditional haven currencies.

Key Movers

The British pound’s drop was partly driven by a report from the OECD that the UK will suffer the worst damage among all the countries in the developed world. Tomorrow, the UK government releases GDP figures to gauge the accuracy of the OECD report.

In Europe today, European finance ministers meet to discuss the EU recovery fund in all its detail. The market will be looking to see if countries such as the Netherlands and Austria will follow the example of Denmark and reconsider the matter of grants being issued to heavily struck nations.

Expected Ranges

USD/CAD: 1.332 - 1.357 ▲

GBP/USD: 1.262 - 1.263 ▲

EUR/USD: 1.132 - 1.136 ▲