FX.co ★ Dollar at 6-Week Low

The dollar index extended losses to around 100.3 on Thursday, its lowest level in roughly six weeks, after a 0.6% drop in the previous session. Markets continued to digest the latest FOMC decision and Fed Chair Warsh’s press conference. As expected, the Fed left the federal funds rate unchanged, though three FOMC members voted for a hike. Chair Warsh reiterated the Fed’s commitment to bringing inflation under control and emphasized that policymakers would not hesitate to act if needed. However, he did not join those calling for an immediate increase and avoided offering explicit forward guidance. This prompted investors to further scale back expectations for a near-term rate move and to increasingly interpret the Fed’s stance as merely delaying what they regard as an inevitable rise in borrowing costs. The implied probability of a 25-basis-point hike in September has slipped to about 55%, down from nearly 80% before the decision.