• Fed says economic activity has been rising at a moderate rate
  • Inflation continues to run below our symmetric 2% objective.
  • Household spending has been rising at a moderate pace.

As expected, the FOMC kept the target range for the federal funds rate at 1‑1/2 to 1-3/4 percent. Overnight FOMC statement is little change from the December statement. The Fed acknowledged again that “economic activity has been rising at a strong rate.” Whereas the Fed is downbeat on the inflation rate. The statement suggested that “Inflation continues to run below our symmetric 2% objective.”

In the December statement, the committee said, “inflation near the Committee’s symmetric 2 percent objective.”

Post the inflation comments; traders read the FOMC statement on a dovish note. The price of Gold reacted positively to the dovish FOMC January meeting.

The statement ended with, ” The Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. “

In the Press Conference, Powell highlighted concern on inflation “We’re not comfortable with inflation rising or running persistently below our 2% symmetric objective”.

FX:  Post FOMC statement and the press conference the dollar was the winner against NOK with 0.60%, CAD with 0.40%, and NZD with 0.30%. The US10Yr marginally lowered, closed at 1.60%, and the 2-year U.S Treasury yield closed at 1.40%, which is below the current fed funds rate range of 1‑1/2 to 1-3/4 percent.

Commodities: On the back of inflation comments, the price of gold was up by 0.70%, closed at $1577.


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