By CountingPips.com
The U.S. Federal Open Market Committee announced today that it is holding the U.S. interest rate steady at its record low level and would be ending its purchases of Treasury securities in October. The FOMC had last cut the interest rate to the target range of 0 
percent to 0.25 percent in December and today’s decision to keep the rate unchanged was widely expected by market forecasts.
On the economy, the FOMC statement marked a more optimistic tone than prior statments and said that, “Information received since the Federal Open Market Committee met in June suggests that economic activity is leveling out. Conditions in financial markets have improved further in recent weeks. Household spending has continued to show signs of stabilizing but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit.”
The statement also said that the FOMC policy of buying $300 billion worth of Treasury securites would most likely finish in October. The Fed program’s to buy $200 billion of agency debt and $1.25 trillion of mortgage-back securities would still go on throughout the end of the year. Interest rates will likely not move for a little while as the Fed statement said that despite expecting “a gradual resumption of sustainable economic growth,” interest rates would probably be at or near the zero level for “an extended period.” Read the full Fed statement here.
Also, released out of the United States today was that the trade deficit edged up in June as imports rose according to a release by the Commerce Department today. The U.S. trade deficit increased to $27.0 billion in June following a revised deficit of $26.0 billion in May. The trade balance data was less than the approximately $28.7 billion deficit that market forecasts were expecting for the month.
The U.S. had a total of $125.8 billion worth of exports which was an increase of $2.4 billion from May’s total. June also saw a gain in imports as it totaled $152.8 billion worth of imports compared with $149.3 billion in May for a increase of $3.5 billion for the month.
The U.S. trade deficit with China increased in June with a $18.4 billion shortfall after a deficit of $17.5 billion in May. Other notable deficits in June were with the European Union at $4.5 billion, Mexico at $3.4 billion, Japan at $3.7 billion and OPEC at $5.9 billion. The U.S. trade surpluses with other countries for June included Hong Kong at $1.4 billion, Australia at $1.0 billion, Singapore at $0.5 billion and Egypt at $0.2 billion.
Forex Market – US Dollar lower in Forex Trading today.
The U.S. dollar has traded lower in forex trading today after gaining in the early part of the week. Immediately after the interest rate announcement, the dollar spiked higher but has since come down from those levels. Overall today, the dollar has lost ground to the euro, British pound, Canadian dollar, Swiss franc, Australian dollar and the New Zealand dollar while the USD has shown gains against the Japanese yen as of 3:31pm ET in the afternoon of the US trading session.
AUD/USD Chart – The Australian Dollar trading higher today versus the US Dollar after two straight declining days.
