The dollar was pushed down against a basket of major currencies.
Immediately following the FED meeting yesterday – Oct 8, 2014 – the dollar fell and in most cases has traded within new ranges since. Such is the impact of the FED statement to keep interest rates low.
Currency changes after FED announcement:
GBP/USD – up from 1.6042 to 1.6168.
EUR/USD – up from 1.2654 to 1.2743 – a new high for the week.
USD/CAN – down from 1.1202 to 1.1107.
USD/JPY – down from 108.71 to 1.0.00 and still falling today.
The dollar index DXY – down 0.5 percent to 85.234 - a two-week low of 85.21 was reached.
Traders had anticipated the dovish slant of the FED participants having heard from Minneapolis Federal Reserve Bank President Narayana Kocheralakota on Tuesday regarding consistent interest rates in line with the FED’s September 17 statement, affirming that interest rates will stay low for a ‘considerable time’ after the $4 trillion U.S bond-buying program ends this month. However, the minutes refer to a misunderstanding on this point, allowing for a move on the FED stance of just how long a ‘considerable time’ means.
Reported from the minutes: "The concern was raised that the reference to 'considerable time' in the current forward guidance could be misunderstood as a commitment rather than as data dependent."
The change in language or timespan could happen as early as the FED’s next meeting on October 28-29.
Stocks reacted well with the biggest day of the last 1-2 years, treasury yields are sticking at multimonth lows, and gold is up to a two-week high.
FTSE Eurofirst 300: up by 0.8 percent
S&P 500: +1.75% closed up 33.79 points, or 1.8%, at 1,968.89
Dow Jones Industrial Average DJIA: +1.64% up 274.83 points, or 1.6%, to 16,994.22
It was also announced that William English, The Federal Reserve’s head of monetary affairs will step down after 22 years of service. He will stay as a monetary policy advisor until a replacement is found.