TD Securities: Post-FOMC USD Weakness Expected to Remain Limited

The US Dollar (USD) experienced losses following the July Federal Open Market Committee (FOMC) rate hold and Chair Warsh's lack of hawkish guidance. According to TD Securities strategists, the USD weakness was anticipated, with a 0.3% decline after the statement release.

Although the number of dissents were slightly higher than expected, it wasn't a significant surprise for the market given that these members had previously dissented to the statement language at the April FOMC.

The USD weakness extended moderately after the press conference, with market participants interpreting Chair Warsh's commentary as weakening Fed credibility. However, TD Securities expects any post-FOMC USD weakness to be short-lived unless US economic data also starts to surprise lower in the coming weeks.