The US dollar is lower against the vast majority of the G10 currencies with the CAD being the lone exception 30 minutes ahead of the US close. The FOMC was not a game changer but a lower path in dot-chart was enough to take the greenback down. Brace for a hot night with some very special events in Asia.
The Fed released a mixed statement. It highlighted a slower improvement on the labor market and weak investment but noticed stronger household spending and pretty much ignored a decline in inflationary expectations. So in our view the statement was just neutral. However the dot chart was not. While the median for 2016 remained at 0,875% a distribution of the dot changed unfavorably with 6 of the FOMC members expecting just one cut this year against only one such dot in March. There is a high likelihood that J.Yellen was in this group of 6. Speaking of Yellen she was rather neutral as well during the conference starting with some dovish lines but finishing more courageously, underlining a readiness to act (even in July) should inflation threat emerge.
We had some relief from polls in UK today and meanwhile got the labour market data which was pretty strong for the GBP. The GBPUSD is up by more than 0,5% as a result.
Oil is down again, despite a fairly decent DOE report showing anther decline in the US inventories and output. The report was not good enough to stop the correction though as inventories remain high and decline is mostly seasonal.
AUD and NZD both gain some 0,8% against the greenback for separate reasons. The kiwi enjoys strong balance of payment data for Q1 while the Aussie gained on a surge in industrial metals after the news that China was going to increase strategic stockpiles. Both currencies will see a lot of action overnight. We’ll get the Q1 GDP in New Zealand (11:45pm BST), expected at 0,6% q/q and paryrolls in Australia (2:30am) with a consensus at 15k.
More importantly, we will get a decision from the BoJ (around 4am). The Bank is not expected to ease again this time but with mixed data from Japan and a relatively strong yen, anything is possible.
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