Market focuses on FED decision

18 September, 2015

Matthew Boyle

Yesterday was a fairly busy day on the market with data released from the 3 majors, the Pound, Euro and Dollar. In the morning the main news was that UK retail sales slowed slightly in the month of August and as a result the Pound lost ground in the morning session – around 0.75 of a cent against the Euro and 0.5 cents against the Dollar. Mid morning Eurostats showed an increase in construction outputs though which was positive news from the still recovering Eurozone and as a result the pounds gains against the single currency were completely eroded by the close of the day. News of this increase however did allow it to gain against the Dollar (around 0.5%) however with the US posting positive figures for jobless claims and building permits again these gains were gone by the end of the day.

What the market was waiting for without doubt was the highly anticipated Federal reserve Interest rate announcement at 7pm yesterday evening. With so much speculation as to “will they or wont they” much of the market appeared to be sitting on the fence and strangely it seemed that there was unusually low amounts of speculation on the result as demonstrated by the lack of major movement in rates. The announcement yesterday evening showed the FED have decided to keep interest rates at the same level since 2008, and we are now likely looking at a rise being considered early 2016. They have also suggested that when they do hike rates this will be a slow process and one that will occur incrementally. So those of you hoping for the USD to benefit from this may have to wait some time, with the gains unlikely to come as quickly.

Unsurprisingly and a result of speculation around the potential hike the USD weakened and lost a cent against GBP and around the same against EUR. Due to the see-saw effect we have mentioned much over the past weeks this helped EUR to strengthen against GBP and since the announcement has also gained around a cent. Today we have a quiet day in terms of data, with the only data of real note coming from Canada. So don’t be surprised if we see the market continue to trade off yesterdays FED announcement.

So speak to your Currency Index broker today for some friendly and professional advice on how to get the most out of your currency transfer. Currency index can help you stay well informed and well ahead of the market.