Fed keeps interest rates on hold

The Fed as expected kept interest on hold. The next FOMC meeting is on Sep 16th and is widely expected to remain unchanged. However the US$ strengthened during the day as oil, gold and some other commodities were sold.

This was also due to better forecast for Non-manufacturing ISM for July and oil below 120$ meant a rally on equities. The rally was halted after the Fed’s decision to hold interest rates. The Fed also mentioned they were worried about inflation. 

Early on the Euro went through 1.55 against the dollar as Oil fell below the $120 per barrel level. The European sales were down at -0.6% in June. It rallied slightly after the FOMC held rates at 2.00% but was quickly reversed with Euro at lows for the rest of the session. 

The Sterling fell with the strength of the US $. Better than expected June PMI services at 47.4 against forecasts of 46.7 and Industrial Production weakened at -0.2% in June month.