USD and Gold Impacted by Taper Decision, Shares Only Gainers

The U. S. dollar closed Wednesday with modest losses against most of its major rival currencies, following the Federal Reserve Bank’s monetary policy announcement.

Fed kept interest rates unchanged as expected, and announced the reduction of its asset purchases by $15 billion per month. The Fed will begin taper later this month with reductions in Treasuries purchases by $10 billion, and mortgage-backed securities by $5 bln.

Policymakers still believe inflation will be transitory, although Powell noted that supply chain difficulties will extend well into 2022, which means inflation will also remain high.

Jerome Powell has adopted a conservative and ultra-patient stance with inflation above 2%. Among other things, he also indicated that he would not want to surprise markets by changing the taper strategy, opposite to the statement that noted that they can adjust the strategy as needed.

Powell’s conservative stance put some pressure on the dollar while providing a boost to Wall Street, with the three major indexes reaching record highs. US Treasury yields advanced, with the yield on the 10-year Treasury note settling at 1.60%.

The EUR/USD pair is still powerless and incapable to advance beyond 1.1615, while GBP/USD trades near 1.3700. The AUD/USD pair recovered towards 0.7450, but the risk is twisted to the downtrend amid an also dovish RBA. The USD/CAD pair fell below 1.2400, despite weaker oil prices.

WTI settled around $80.00, down after U. S. crude stocks rose by more than expected, while gasoline inventories hit a four-year low. Also, Iran nuclear talks are set to resume on November 29 in Vienna.
Gold plummeted ahead of the Fed’s decision, trimming part of their intraday losses ahead of the close. It finished the day at around $1,770.00 per ounce.