Dovish Hike

The Fed raised rates but left the dot-plot unchanged for 2018 at a total of three hikes. An upgrade for 2019 by 0.2%, for 2020 by 0.3% and 01.% for 2020 was not enough for the US Dollar.

The statement contained an upbeat comment on the economy and caused initial confusion, but as time passed by, the lack of an upgrade for 2018 had the upper hand.

In his press conference, Powell sounded more direct than Yellen but did not provide any clear-cut answers. He downplayed the importance of the dot-plot and said things can change.

More importantly, Powell said he was surprised that wages did not rise and discussed productivity.

About trade, he said that while it did not impact this decision, some business contacts said that they are concerned about trade policy.

All in all, the Fed made a reluctant upgrade of the dot plot and Powell did not sound very enthusiastic.

The US Dollar extended its losses during the press conference and we can expect further pressure down the road.