Dovish FOMC pushes dollar down

US Federal Reserve turned out to be more dovish than many was expecting yesterday that resulted in Dollar demise against most of its counterparts.

FED was dovish in most of its projection.

• FOMC participants reduced their forecast for US economy. Real GDP growth was revised downwards to 1.8 to 2.0 percent for 2015, from March's projection of 2.3 to 2.7 percent.
  
  
• Similarly unemployment rate forecast was revised higher in June's report to 5.2 to 5.3 percentage from March's projection of 5 to 5.2 percent.
  
  
• Inflation range was widen by 0.1 percent to the downside in 2016, bringing the projection to 1.6-1.9 percent.

FED chair Janet Yellen was dovish in most of her communication.

• FED chair reiterated over and over, how US economic activities remain softer than initially estimated and monetary policy to remain accommodative unless further evidence of growth, employment and inflation picks up enough pace to call for first increase.

• Moreover, FED chair tried to affirm that overall FED policy is likely to remain very accommodative compared to historic average even a rate hike appears this year, which means there would be considerable time before FED delivers second hike.

However, some comments and projection can be considered as hawkish.

• Still 15 out of 17 policy participants consider First FED hike to come in 2015. Median projections indicate, participants are projecting rates to be more than 0.5% this year.

• FED chair in Q&A session, didn't seem too bothered about stronger dollar and thinks that dollar has somewhat stabilized.

Dollar index, which is value of dollar basket of currencies sold of sharply yesterday, from 95 to 94 today in Asian hours. However dollar bulls are trying to go for correction from 94 level.

Dollar is likely to remain with downside bias.