Dollar Falls as Fed Maintains Hawkish Stance
The Federal Reserve's decision to maintain interest rates was seen as hawkish at first, but its commitment to achieving an inflation target led to a decline in short-term interest rates and the US dollar. The expected year-end effective Fed funds rate fell by 15 basis points from its session high yesterday.
The 2-10-year yield curve steepened by 12 basis points, completely unwinding the flattening of the last six consecutive sessions. This is now the steepest since the end of May. The Bank of England stood pat today, with a 50% chance of a hike at its next meeting in September.
The US two-year yield remains soft today, and the dollar is consolidating with a softer profile against most currencies. The Nasdaq has been unable to sustain upticks and fell for six consecutive sessions coming into today, but better tech earnings from Microsoft and Samsung encouraged investors to try again.