US Dollar Gets No Support From FOMC, Euro Awaits Eurozone CPI

Market Reviews

US dollar traded below a four-month high against major currencies, with the focus shifting to economic data after the Federal Reserve did little to alter market expectations for further interest rate rises this year. The Fed left its benchmark overnight lending rate in a target range of 1.50%-1.75% as had been widely expected. The FOMC also expects, that inflation would approach a 2% target in the medium term.

Stock markets did not receive support from FOMC statement and closed in red. The DOW fell by 0.72%, S&P 500 lost 0.72% and NASDAQ declined by 0.42%. US 10-year yield also closed slightly lower by 0.012 at 2.964%.

The Australian dollar rose after the publication of positive data on Australia's trade balance. According to the Australian Bureau of Statistics (ABS), the trade surplus rose to AUD 1.53 billion, seasonally adjusted, well above expectations of AUD 650 million (the biggest surplus since May 2017). Exports grew by 1%, while imports increased by also 1%.

The British pound and euro remain unsteady. While the euro rose by 0.3% to $1.1985, getting some respite after setting a near four-month low of $1.1938 on Wednesday, investors are focused on the Eurozone inflation data. The Eurozone CPI is expected to be unchanged at 1.3% yoy in April.

Markets are also focused on European Commission’s new economic forecasts. Canada will also release trade balance, while the US will publish trade balance, jobless claims, ISM services and factory orders. UK will release PMI services, which is expected to increase from 51.7 to 53.5 in April.

The US trade delegation arrived in Beijing today for key talks over tariffs. The discussions, led by US Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He, are expected to cover a wide range of US complaints about China's trade practices, from allegations of forced technology transfers to state subsidies for technology development.