The Fed decided to keep the policy rate unchanged on its lastnight FOMC meeting. The US central bankers did not want to or were unable to commit any further on the exact timing of the first rate hike and the wording of the statement remained unchanged in that respect: "The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term", notes Commerzbank.



In fact the FOMC has noted improvements on the labour market since the last meeting and this becomes clear from yesterday's statement. In the end this is likely to have been the reason for the moderate USD strength seen since then.



According to Commerzbank, "A first rate step in September remains possible as long as the data published until then does not disappoint massively. So that leads us onto the US GDP data for Q2, due for publication today. Following the weak first quarter consensus now expects a rise of 2.5% qoq (on an annualised basis)."

There are uncertainties on the external front: China and also the development of the oil price which currently constitutes an important driver of the development of the inflation expectations in the US. Under these circumstances it does not seem like a bad idea to keep all options open. However, as that means that the uncertainty surrounding a lift-off at the next meeting remains high the USD strength resulting from the statement is likely to remain limited too, adds Commerzbank.