US FX WRAP: Dollar hit as Fed hold reduces 2026 hawkish bets

USD was sold as the FOMC's meeting failed to match hawkish expectations. The decision to hold rates was widely expected, although three members opted for a 25bps rate hike; however, a dovish reaction was seen post rate decision in a likely unwinding of hawkish bets as money markets were pricing in a c. 33% chance of a 25bps hike prior to the confab. The statement was left alone, with no forward guidance, as was expected. Warsh stuck to his usual tone, giving no forward guidance, reiterating commitment to the 2% target, whilst noting the decision not to hike in July was not much influenced by the June core CPI reading, stressing the importance of trends. In the near term, focus will remain on geopolitics but will look towards the upcoming dissenters' reasoning for their call to hike by 25bps, namely, remarks from Fed's Logan (2026 voter), Hammack (2026 voter), and Kashkari (voter) - inflation is likely to be the centre of all statements. DXY currently trades around 100.762 lows from an earlier 101.495 high.AUD was hit by a softer-than-expected June inflation report. Inflation failed to accelerate as some had expected, with the headline Y/Y printing 3.8% from 4.0% (exp. 4.1%). AUD/USD hit lows of 0.6922 before trimming to 0.6954.Aside from the above, newsflow was light for the remaining G10 FX space. On Thursday, GBP is in focus ahead of the BoE policy announcement. The central bank is expected to maintain rates at 3.75%, though the vote split could well be more hawkish than the 7-2 prior given the energy rebound in July. Cable rose today to ~1.3356 at pixel time, nearing its 20 DMA of 1.33806. Click here for the full Newsquawk BoE Preview.