Dollar moves higher in volatile trade post FOMC decision: April 28, 2016

Market Review - 27/04/2016 23:15GMT

Dollar moves higher in volatile trade post FOMC decision

The greenback closed the day higher against majority of its peers in volatile trading on Wednesday after Fed's policy statement was less dovish than initially expected.

Fed's statement said 'will closely monitor inflation indicators and global economic, financial developments; Fed does not give an assessment of its balance of risks in statement; Fed removes language from prior statement that stated global, financial developments continued to pose risks; Fed repeats inflation is expected to remain low in near term, but rise to 2% over medium term; Fed says labor markets have improved further even as economic growth appears to have slowed; household spending growth has moderated but households' real income has risen at a solid rate; Fed repeats with gradual adjustments to monetary policy, economic activity will expand at moderate pace, labor market will strengthen; Fed repeats expects economic conditions will evolve in way that warrants "only gradual increases" in Fed funds rate; Fed vote in favor of policy was 9 to 1, George dissented, preferring to see a rise in the target rate to 0.5-0.75%.'

Although the single currency edged lower to 1.1291 at European open, price rose to 1.1333 in European morning before trading in sideways manner ahead of Fed's rate decision. Later, euro dropped briefly to 1.1272 as Fed's statement was less dovish than initially expected but price quickly rebounded to 1.1361 in New York afternoon before retreating again.

Versus the Japanese yen, the greenback weakened to 111.03 in Asian morning before rebounding to 111.40 in European morning. Later, dollar briefly rose to 111.75 after the release of Fed's statement before falling sharply to 111.08, however, the pair found some support and staged another rebound in New York afternoon.

The British pound briefly rose to 1.4622 before tumbling to 1.4547 in European morning, however, price swiftly pared its losses and recovered to 1.4619 after the release of in-line UK GDP data. However, cable dropped once more to 1.4530, then to intra-day low at 1.4474 post release of Fed's rate decision before staging a rebound.

Data to be released on Thursday:

New Zealand RBNZ interest rate decision, Japan CPI, unemployment rate, jobs/application ratio, all household spending, industrial production, retail trade, BoJ interest rate decision, construction orders, housing starts, Australia export price index, import price index, China CB leading economic index, U.K. nationwide house prices, Germany unemployment rate, unemployment change, CPI, Harmonised index of consumer prices, Eurozone business climate, economic sentiment, consumer confidence, consumer inflation expectation, selling price expectation, U.S. GDP, personal consumption expenditures and initial jobless claims.