Euro soared against the dollar after the FOMC announcement to hold rates unchanged, brining EURUSD 200 pips higher to 1.4396 by the Asian market open. An opportunity for profit-taking ensued, making EURUSD slide back down slightly to 1.4330 where it went into consolidation for the rest of the session.
Cable opened the Asian session at 1.6334 after rising over 160 pips following the dovish FOMC statement. Profit-taking brought GBPUSD down to 1.6267. EURGBP traded sideways the whole session, holding in a range between 0.8817 and 0.8797. The focus is on the Bank of England inflation report which is due today. A negative tone could sway the Pound downwards.
The yen strengthened against the dollar after the pessimistic Fed announcement to keep rates at record low for the next two years, signalling that the U.S has a long road to recovery. The Japanese currency tends to strengthen during economic and financial turmoil because Japan’s trade surplus makes it less reliant on foreign capital. Surprisingly there was no BOJ intervention. USDJPY reached a low of 76.77.
USDCHF bounced from the record low of 0.7088 reached in the U.S. session, to rise to the Asian open of 0.7207 and then remaining range bound between 0.7200 and 0.7249. Despite the Swiss franc strength wearing off slightly post-FOMC, its safe haven status will keep it firm and will likely regain strength due to the lingering concerns of a global economic slowdown.
The Australian dollar opened in Asia at 1.0353 against the U.S. dollar after rising over 3.0% in the last two hours of the North American session as the FOMC announcement to keep the Fed funds rate at record low through the middle of 2013 gave commodity-linked currencies a boost. A high of 1.0411 was seen soon after the open but profit taking set in and sent AUDUSD back to 1.0310 where it held supported around that level due to positive Chinese trade data. China is a major trading partner of Australia.