The Fed assessment came as widely expected in appreciation of the recent upbeat economic data of November subsiding the impact of the inflation currently which put no pressure on the Fed to hike interest rate which at an its current exceptionally low level soon. It has become widely concluded that the Fed has closed the door of taking further easing steps. The Fed has indicated that it is to slow its current buying of bonds and mortgage backed securities which are planed to end by next July and most of such purchasing easing plans for providing liquidity are to be ended by next February as it says that the current financial situation of the banking system is helping the growth and the labor market deterioration is abating. The language was widely expected and there was no direct materialized left impact on the greenback.
The market was waiting for the US CPI monthly figure excluding the food and energy to be up by .2% as the same as October and it has shown a subsided inflation impact as the Fed has mentioned in its assessment coming at just 0.0% and y/y by 1.8% from 1.7% in October and it has come at just 1.7% which weighed negatively on the greenback during the US session.
The single currency was strongly depressed recently by the negative impact of the Greece huge unsustainable debts worries and the new worries about the Austrian banking system and its weakness has continued after the US Fed's Decision during the Asian session we have seen earlier in the week, the release of the Germane ZEW of economic sentiment of December which came down to 50.4 from 51 in November and now the eyes will look forward for the release of the germane IFO of December tomorrow which is expected to be 94.1 from 93.9 and if we are to meet further weakness in the business climate the Single currency can test 1.418 after breaking 1.459 and 1.448 previous support levels.
Walid Salah El Din