FOMC Leaves Rate Range Unchanged, Dollar Dives Before Powell Presser

- The FOMC expectedly left rates unchanged at 2.25-2.50%; rates markets were pricing in a 0% chance of a hike today.

- Today marks the first non-quarterly meeting that will feature a regularly scheduled press conference by the Fed Chair.

- The Feds policy statement made clear that it is going to be patient and see how data evolves before it makes judgements over the impact of the US government shutdown.

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The Federal Open Market Committee expectedly left the interest rate range unchanged at Wednesday‘s meeting and the first of 2019. The rate decision is also the first to be accompanied by a non-quarterly press conference afterwards, part of Governor Jerome Powell’s initiative to provide clarity regarding the central banks thought process. While the interest rate hold was expected, a language change in the report provided the spark for earnest price action.

Included with the announcement was the Fed‘s decision to drop certain language from their report. In what many analysts believe to be a confirmation of a dovish shift, Fed officials removed reference to ’further gradual rate increases.‘ Further, the committee pledged a ’patient stance on future moves. The dovish language drove the Dollar (reflected by the DXY Dollar Basket) below 95.00 from the 95.95 area before the release.

US Dollar Basket Price Chart, 1-Minute January 30th (Chart 1)

Powell‘s subsequent commentary could provide further insight on the Fed’s stance and result in a deeper dive for the Dollar or a rebound.