The July FOMC meeting held last night was a fairly low impact event. In line with expectations the Fed refrained from adjusting policy levels while delivering a message of concern and uncertainty, highlighting its readiness to support the economy further if necessary.

Key Quotes From The July FOMC statement

  • Following sharp declines, economic activity and employment have picked up somewhat in recent months but remain well below their levels at the beginning of the year.
  • Weaker demand and significantly lower oil prices are holding down consumer price inflation.
  • The path of the economy will depend significantly on the course of the virus. The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term.
  • The Committee will continue to monitor the implications of incoming information for the economic outlook, including information related to public health, as well as global developments and muted inflation pressures, and will use its tools and act as appropriate to support the economy.
  • To support the flow of credit to households and businesses, over coming months the Federal Reserve will increase its holdings of Treasury securities and agency residential and commercial mortgage-backed securities at least at the current pace to sustain smooth market functioning, thereby fostering effective transmission of monetary policy to broader financial conditions.
  • The Committee will closely monitor developments and is prepared to adjust its plans as appropriate.


In all, the Fed’s message was very much in line with what we have been hearing from other central banks in the G10 recently. The Fed acknowledges that there has been a pick-up in activity following the end of the nationwide lockdown though highlights that activity levels are still not fully recovered. With regard to the outlook for the recovery back to pre-virus levels, the pandemic is still a major source of uncertainty, a reference to the growing second wave fears taking hold in the US. As such, the Fed will monitor developments within the pandemic, taking account of the performance of the economy in coming months, and will adjust its policy as necessary. With this in mind, expectations of further easing from the Fed over coming months remain elevated, keeping the USD outlook skewed to the downside.

Technical Views

USDCHF (Bearish below .9192)

From a technical viewpoint. USDCHF has broken below the major long-term support level of .9192 (2018 and former 2020 lows) and is now testing the bottom of the bearish channel from earlier 2020 highs. While .9192 holds as resistance, the near-term bias remains bearish with the mid 2015 lows of .9076, the next region to watch as support.

Fed Highlights Pandemic Uncertainty At July FOMC

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