Forex News: U.S. Dollar Slides As Fed Holds Interest Rates

U.S. Dollar Slides As Fed Holds Interest Rates Amid Renewed Middle East Conflict

(RTTNews) - The U.S. Dollar value edged lower as the Federal Reserve keeps interest rates steady after its two-day meeting while the fresh escalation in the Middle East triggered a rebound in crude oil prices.

The U.S. Dollar Index, DXY, which measures the Greenback against a basket of other major currencies was last seen trading at 100.82, down by 0.60 (or 0.59%) today.

According to the Mortgage Bankers Association, the Purchase Index decreased to 159.80 on July 24 from 165.80 of the previous week.

While against the Euro, the USD was trading at 1.147, down by 0.71%, against the GBP, the USD was trading at 1.336, down by 0.56%.

Against the USD, the Japanese Yen was trading at 163.449, up by 0.24%, the Swiss Franc was trading at 0.813, up by 0.63%; and the Canadian Dollar was trading at 1.404, up by 0.42%.

Against one unit of Australian Dollar, the USD was trading at 0.695, up by 0.28%.

According to the Australian Bureau of Statistics, the Consumer Price Index unexpectedly decreased 0.10% in June over the previous month. The annual inflation rate unexpectedly eased to 3.80% in June from both May's reading and expectations of 4.0% but remained above the central bank's 2.00%-3.00% target range. The Consumer Price Index decreased to 102.03 in June from 102.09 in May.

As predicted by a large section of investors and economists, the U.S. Federal Reserve today held interest rates steady at 3.50% to 3.75% for the fifth straight meeting.

The rate-setting committee reached the 9 to 3 decision after two days of intense discussions. Three officials expressed their dissent as they preferred a quarter-point rate hike.

In his opening remarks during his address Fed Chair Kevin Warsh observed that the economy is showing resilience even with the recent shocks.

Warsh stressed that the goal of the central bank is to keep inflation manageable and reiterated that there is no higher "soft target" for inflation except the 2%.

The market movements were also severely impacted by renewed geopolitical concerns due to a sudden flare-up in U.S.-Iran conflict.

Today morning, the U.S. Central Command announced that the Islamic Revolutionary Guards Corps of Iran fired several ballistic missiles, targeting a U.S. military base in Jordan. The CENTCOM successfully intercepted and destroyed all of them.

In addition, the U.S. and Saudi forces jointly struck the logistics sites of Iran-linked militias across eastern Iraq in coordination with the Iraqi government.

Surprisingly, these strikes came after a pause on U.S.-Iran attacks for four consecutive nights following prior two weeks of intense exchange of attacks.

Referring to the exchange of attacks, in a telephone interview with Fox News, U.S. President Donald Trump stated that the U.S. will be hitting hard on Iran. However, Trump admitted that he had still allowed the negotiations to continue.

Last Friday, after planning for a massive strike on Iran, Trump halted them suddenly.

On Monday, Trump stated that he paused the attacks in order to give diplomacy another chance and optimistically sounded stating that something good could happen.

Now, the surprise launch of attacks by Iran has spurred concerns of escalation of tensions.

As a result, crude oil prices jumped by more than 6% and gold prices fell today.

Negotiations between the U.S. and Iran is yet to yield a significant breakthrough.

Reportedly, Iran is in talks with Oman and Saudi Arabia to chart out a plan for controlling the shipping traffic across the Strait of Hormuz.

Currently, investors are betting on a 63.40% chance of a quarter-basis-point interest rate-hike in the upcoming meeting of the U.S. Federal Reserve on September 15-16 while the odds on rates being held at the current level stand lower at 36.60%, according to the CME Group's FedWatch Tool.

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