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EUR/USD Slumps After FOMC Meeting

October 30, 2013 by

The dollar jumped after the Federal Open Market Committee maintained its stimulating measures. The statement released by the FOMC was perceived as being less dovish than was expected, propelling the US currency higher. There were not many other good reports for the greenback. The employment data was even worse than pessimistic expectations.

ADP employment showed an increase by 130k in October, far below the projected 151,000 growth. What is more, the September change was revised down from 166k to 145k. (Event A on the chart.)

CPI rose 0.2% on a seasonally adjusted basis in September, in line in forecasts, after increasing 0.1% in August. (Event B on the chart.)

US crude oil inventories increased by 4.1 million barrels last week and are above the upper limit of the average range for this time of year. The actual increase was above the predicted rise by 1.9 million, but below previous week’s 5.2 million. Total motor gasoline inventories decreased by 1.7 million barrels and are near the upper half of the average range. (Event C on the chart.)

FOMC maintained its monetary policy unchanged at today’s meeting. (Event D on the chart.) The Committee said that economic conditions were improving, but more evidences of recovery is requited before adjusting pace of asset purchases:

The Committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program as consistent with growing underlying strength in the broader economy. However, the Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases.

The statement also said:

The Committee sees the downside risks to the outlook for the economy and the labor market as having diminished, on net, since last fall.

EUR/USD for 2013-10-30

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