Forex Today: The US labour market comes to the fore

As expected, the Federal Reserve left its interest rates unchanged at its event on Wednesday, removing wording regarding potential rate hikes, reiterating that inflation remains elevated and that economic activity has been expanding at a robust pace.

Here is what you need to know on Thursday, February 1:

The greenback derived further strength in response to the hawkish tilt by Chief Powell at its press conference following the widely anticipated decision to leave rates unchanged by the Fed, motivating the USD Index (DXY) to fade the initial pessimism and regain upside traction. Moving forward, Initial Jobless Claims and the ISM Manufacturing PMI should take centre stage on February 1.

EUR/USD challenged YTD lows in the sub-1.0800 region following the Fed gathering, extending at the same time its multi-session consolidative theme. In the euro docket, the final Manufacturing PMI is due on Thursday, along with the flash Inflation Rate in the bloc and the speech by ECB President Lagarde.

It will be a big day for the British pound, as the BoE meets and is largely anticipated to keep its monetary status quo on February 1. Further data will show the final Manufacturing PMI for the month of January. GBP/USD, in the meantime, remained stuck within the so-far yearly range between 1.2600 and 1.2800.

Diminishing US yields prompted a slight drop in USD/JPY, which briefly flirted with the 146.00 support. On Thursday, the only release of note in Japan will be the weekly Foreign Bond Investment.

Further range bound remains the most likely scenario in the near term for AUD/USD. Thursday’s calendar in Oz includes the advanced prints for Building Permits during December.

Crude oil prices dropped markedly in response to a larger-than-expected build of US weekly stockpiles, while Chinese concerns also helped with the downside.

Gold prices rose to two-week highs around the $2050 mark per troy ounce just to end the session around $2030, while Silver prices added to Tuesday’s losses and breached the $23.00 yardstick.