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EUR/USD Jumps After FOMC, Core CPI Miss

December 14, 2017 by

EUR/USD rallied on Wednesday and remained elevated on Thursday due to news from the United States. Headline US inflation was within expectations, but the core figure missed forecasts. The Federal Open Market Committee hiked the benchmark interest rate as was expected, but there were two dissenters. And markets doubt that the FOMC will be able to perform three more hikes next year despite its projections.

CPI rose 0.4% in November on a seasonally adjusted basis, matching expectations. The index was up 0.1% in October.

Crude oil inventories dropped by 5.1 million barrels last week, though stayed in the middle of the average range for this time of year. That was far bigger drop than a 3.6 million decline predicted by analysts, but not as big as the previous week’s slump by 5.6 million. At the same time, total motor gasoline inventories climbed by 5.7 million barrels.

FOMC raised its target range for the federal funds rate to 1.25%-1.5%, surprising no one. The Committee revised its projections for growth up and for unemployment down compared to the September forecast. What is more important, the FOMC kept its projected dot plot for 2018 unchanged, meaning that policy makers still anticipate three interest rate hikes next year.

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