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Dollar Weakens as Fed Holds Rates

The euro firmed back toward session highs and the dollar made new lows for the day.

NEW YORK (TheStreet) -- The decision to leave rates on hold was an easy one for the Fed to make. The Fed still anticipates this will be the case for an extended period. The statement seemed to recognize some of the less favorable data since it met last.

For example, it dropped the phrase that said housing starts had edged up. It recognized that financial conditions were also less supportive, though it attributed this primarily to developments abroad. Not unexpectedly, the Fed's Hoenig continued to dissent from the guidance about the extended period.

The dollar and equities weakened in response. The euro firmed back toward session highs and the dollar made new lows for the day against below JPY90. The 2-year note yield fell to the lowest of the year.

In general, there is little new in the statement and guidance. FOMC meetings are not non-events, but there is no real surprises or new information in the FOMC statement. We'll have to wait for the minutes to learn more about the discussion of inflation, which the statement now characterized as trending lower rather than being subdued.

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Marc Chandler has been covering the global capital markets in one fashion or another for nearly 20 years, working at economic consulting firms and global investment banks. Currently, he is the chief foreign exchange strategist at Brown Brothers Harriman. Recently, Chandler was the chief currency strategist for HSBC Bank USA. He is a prolific writer and speaker and appears regularly on CNBC. In addition to being quoted in the financial press, Chandler is often a guest writer for the Financial Times. He also teaches at New York University, where he is an associate professor in the School of Continuing and Professional Studies. While Chandler cannot provide investment advice or recommendations, he appreciates your feedback;

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