EUR/USD Jumps After FOMC, Resumes Decline Later

EUR/USD was falling during the current trading session but jumped after the monetary policy statement of the Federal Open Market Committee turned out to be less hawkish than dollar bulls have hoped for. The rally was short-lived, though, and the currency pair resumed its decline quickly. The dollar was firm even as the recent macroeconomic data from the United States was rather poor.
CPI fell 0.3% in November after staying unchanged in October. The median forecast promised a 0.1% drop. (Event A on the chart.)
Current account balance posted a deficit of $100.3 billion in Q3 2014 while experts predicted the shortage to remain unchanged from $98.4 billion in Q2. (Event A on the chart.)
Crude oil inventories decreased by 0.8 million barrels but remained above the upper limit of the average range for this time of year. This is compared to the predicted decrease of 2.6 million and the previous week’s growth of 1.5 million. Total motor gasoline inventories increased by 5.3 million barrels last week, and are well above the upper limit of the average range. (Event B on the chart.)
FOMC released its monetary policy statement today. The Committee kept the language “considerable time” in regard for the time for interest rates to remain low. FOMC added the phrase to the statement:

Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy.

Still, according the economic projections, the vast majority of policy makers expect monetary tightening in 2015. (Event C on the chart.)
Yesterday, a report on housing starts and building permits was released. Housing starts were at the seasonally adjusted annual rate of 1.03 million in November, down from 1.05 million in the previous month. Building permits were at the seasonally adjusted annual rate of 1.04 million, down from 1.09 million in the previous reporting period. The average specialists’ prediction was at 1.04 million and 1.06 million respectively. (Not show on the chart.)


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