[MARKET ANALYSIS] Dollar takes a breather and holds on to post-FOMC spoils

DXY: Flat

• Takes a breather and holds on to the prior day's spoils after climbing back above the 100.00 level owing to the broad hawkish reaction to the FOMC meeting, where the Fed hiked rates by 25bps as expected in a unanimous decision, while the updated SEPs median view was for another 25bps hike this year, followed by rates remaining on hold throughout 2027. In terms of Fed Chair Warsh's presser, the overall message was a familiar one, with price stability the primary focus, while there were later comments from US President Trump that interest rates in the US should be 1% or less and called for a fast cut to US rates, although Trump also told Warsh to do what he wants and said that he wants Warsh to be independent.

EUR/USD: Flat

• Languishes near post-FOMC lows after slumping to sub-1.1500 territory owing to the hawkish Fed.

GBP/USD: Flat

• Retreated beneath the 1.3400 handle as the dollar strengthened on the Fed, while in-line UK CPI data is unlikely to shift views for the BoE's MPC at today's confab, where rates are expected to be held steady in a 6-3 vote split.

USD/JPY: Flat

• Plateaued overnight after climbing to 156.00 territory in reaction to the Fed announcement, while the BoJ also kicks off its 2-day policy meeting where the central bank is seen to be backed into a corner and expected to hike rates following rare joint currency intervention in July and rhetoric from officials, including pressure from the US.

Antipodeans: AUD/USD +0.2% / NZD/USD +0.2%

• Nurses some of their recent losses as sentiment in Asia-Pac proves to be resilient, while participants also digest the stronger-than-expected New Zealand GDP data.