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Graphic Rewind: US Dollar Finds Gains Beyond FOMC

Benjamin Spier

Talking Points:

  • US Dollar finds movement in other parts of the globe after FOMC
  • USD drops against the Aussie on surprising building approvals
  • EUR/USD rides lower on a lower inflation read

A look back at the past 24 hours of Forex trading using movements in the US Dollar Index:

US Dollar 15-Minute 12:00 10/30 to 12:00 10/31 EST

Graphic_Rewind_US_Dollar_Finds_Gains_Beyond_FOMC_body_Picture_1.png, Graphic Rewind: US Dollar Finds Gains Beyond FOMC

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The Dow Jones FXCM Dollar Index continued to set new 2-week highs, after additional data from around the globe added to gains initially started by the release of the FOMC rate decision.

Although the FOMC statement released with the unchanged rate decision seemed dovish enough at first look, the US Dollar rallied as traders compared the language in October to the language in the September statement. The talk of tapering QE was unchanged from September, despite a government shutdown and debt ceiling crisis, which may have surprised greenback traders.

Some of the initial gains in US Dollar were unwound through the rest of the NY session, and those losses continued into the Tokyo session. Australian building approvals significantly beat expectations and sent the Aussie higher against all major pairs, like the US Dollar.

In the London session, Euro-zone inflation was reported lower than expected and unemployment was higher than expected, both of which should have led to a weaker Euro. However, the Euro did not immediately see any lasting reaction to the data. Instead, the meaning of the data for the next ECB meeting slowly sunk in with traders, and the greenback index erased overnight losses on the weakening Euro.

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Charts created by Benjamin Spier using Marketscope 2.0

-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to bbspier@fxcm.com .

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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