Forex today was in fact dominated by much better US data while, otherwise, markets were bracing for the FOMC outcome that came, pretty much, as expected.
At the time of writing, the DXY is up 0.26% between a range of 98.89-99.28 in comparison to the 52WK range of 91.9119-103.82. US 10-year yields were also higher at the time of writing at +1.97% between a range of 2.2767-2.3252%.
The key data that drove the dollar higher were the Institute for Supply Management that said its non-manufacturing purchasing managers’ index climbed to 57.5 in April from 55.2 in March, besting median forecasts of 55.8. Earlier, the ADP report was good enough as a prelude to solid nonfarm payrolls on Friday with 177,000 new positions for the month beating the expectations of 175,000.
The FOMC's main takeaways, after leavings rates on hold at 0.75-1.00 pct, were as follows:
- The decision was unchanged and unanimous.
- Slow down in GDPQ1 is viewed as transitory.
- Expects the economy to grow at a moderate pace.
- Fundamental consumption growth remains solid.
- Economy roughly balanced.
- Household spending up modestly.
- 12-month inflation running close to its 2% goal.
- Fed repeats it maintaining balance-sheet reinvestment strategy.
- Fed expects the economy to warrant gradual rate hikes.
- core inflation continued to run somewhat below 2%.
- Job gains solid.
- The labour market continued to strengthen as growth slowed.
In respect to other currencies, the dollar was strong across the board on expectation of a Fed hike as soon as June with the euro was trading at 1.0895 down -0.32% on the day, having posted a daily high at 1.0938 and low at 1.0887, GBP/USD was trading at 1.2875, down -0.50% on the day, having posted a daily high at 1.2950 and low at 1.2870. EUR/GBP was trading at 0.8461, up 0.17% on the day, having posted a daily high at 0.8480 and low at 0.8437.
USD/JPY was trading at 112.69, up 0.62% on the day, having posted a daily high at 112.72 and low at 111.96. EUR/JPY was trading at 122.77, up 0.28% on the day, having posted a daily high at 122.90 and low at 122.31.
USD/CHF was trading at 0.9941, up 0.26% on the day, having posted a daily high at 0.9946 and low at 0.9891.
In terms of commodities, WTI was consolidating between 94 cents on the 47 handle per bbl, Gold was down over 1% at 1,240.27 at the time of writing between a range of 1,239.64-1,257.81 within a 52WK range of between 1,122.89-1,375.34. USD/CAD was trading at 1.3718, up 0.06% on the day, having posted a daily high at 1.3742 and low at 1.3678. AUD/USD is trading at 0.7427, down -1.44% on the day, having posted a daily high at 0.7548 and low at 0.7420. NZD/USD was trading at 0.6873, down -0.87% on the day, having posted a daily high at 0.6971 and low at 0.6867.
The day ahead:
Analysts at Westpac offered the key events for the day ahead as follows:
"Australia: The Mar trade balance is expected by Westpac to be $4.0 bn, up $0.4 bn from Feb. Export earnings rise a forecast $0.8bn, +2.5%, and for imports, we've factored in a rise of 1.5%, $0.4bn. RBA Governor Lowe speaks on “Household Debt, Housing Prices and Resilience” in Brisbane. This should largely mirror the Apr Financial Stability Review.
US: The Mar trade balance previously dropped $4.6 USD bn in Feb to -$43.6 bn, driven by a $4.3 bn fall in imports. The market survey expects the deficit to widen slightly to $44.5bn in Mar."
- Key notes from the US session
- US: Private Sector Employment Increased by 177,000 Jobs in April - ADP
- United States Markit PMI Composite up to 53.2 in April from previous 52.7
- United States Markit Services PMI came in at 53.1, above expectations (52.5) in April
- US: Business activity continues to rise at historically subdued pace in April - Markit
- United States ISM Non-Manufacturing PMI above forecasts (55.8) in April: Actual (57.5)
- US: Economic activity in the non-manufacturing sector grew in April for the 88th consecutive month - ISM
- US Dollar regains 99.00 post-ISM, focus on FOMC
- United States EIA Crude Oil Stocks change above expectations (-2.16M) in April 28: Actual (-0.93M)
- WTI testing weekly lows post-EIA
- IFOP Poll on French elections (R2): Macron 60% vs. Le Pen 40%
- Fed leaves interest rates unchanged at May meeting
- FOMC's decisions regarding monetary policy implementation - May 3, 2017
- US Dollar pushes higher above 99 after FOMC statement
- French presidential debate: Macron wants to continue reforms he laid out as EcoMin
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