FX Carry Trades Retrace Early Gains as US Equities Show Negative Response to FOMC Sta

FX carry trades like AUD/USD and NZD/JPY were generally making solid headway during the European trading session, but the release of the Federal Reserve’s latest policy statement triggered some risk aversion in the markets, leading the US dollar and Japanese yen higher and carry trades lower. Likewise, the DJIA, which has spent most of the day in positive territory, fell negative after the release of the statement and ultimately closed down 23 points at 8299.86. The interesting part of this was that there was no groundbreaking news revealed, as the FOMC statement was really just a repeat of their last one: low rates for an “extended period,” no quantitative easing expansion, and no major changes to the growth and inflation outlook.
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