Dollar Tumbles as Fed Holds Interest Rates; Oil Surges Amid Middle East Escalation
The US Dollar plummeted on Wednesday after the Federal Reserve left interest rates unchanged in a divided 9-3 vote. The decision, which maintained the federal funds target range at 3.50%, 3.75%, was met with hawkish dissenting votes from Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari, and Dallas Fed President Lorie Logan, who preferred a 25-basis-point increase.
The US Dollar Index (DXY) fell around 0.5% and trades near 100.90, sparking broad selling of the Greenback. Despite the hawkish dissenting votes, the decision to remain on hold raised doubts about whether enough policymakers will support a rate increase at the September meeting.
Meanwhile, West Texas Intermediate (WTI) Oil surged more than 7% and trades near $85 per barrel as the conflict in the Middle East intensifies. The sharp decline in the US Dollar also supported Gold, which rose around 0.7% and trades near $4,056 per troy ounce.
The upcoming economic data from major economies will be closely watched by investors, including preliminary second-quarter GDP figures from Spain, Germany, Italy, and the broader Eurozone. The Bank of England is also expected to leave its Bank Rate unchanged at 3.75% on Thursday.