Market’s focus of the day was the US Federal Reserve announcement as the US Central Bank left its benchmark rate unchanged, as widely expected. The statement was clearly less hawkish than expected, with no hints to a June hike and adding that inflation will run near their 2.0% target in the medium-term.
The EU will unveil its April preliminary CPI this Thursday, with a better-than-expected reading could take some of the pressure on the common currency. The US will release its March trade balance, and some minor employment figures, which will be relevant ahead of Friday’s Nonfarm Payroll release.
The yen showed signs of strength, as US Treasury yields eased ahead of the US Central Bank announcement, and especially after the chances of a June rate hike seem to be decreased after the Fed’s statement. Japan will have a holiday this Thursday, anticipating limited volumes around the pair.
The GBP/USD pair after recovering from a multi-month low of 1.3580, with dollar’s renewed demand early US session sent it down to the 1.3600 ahead of the Fed’s meeting. The pair settled around this last after the event, as the dollar retained its strength after the dust settled. The UK will see the release of the Markit Services PMI this Thursday, with a better-than-expected reading, could make the Pound see another short-lived relief rally.
Crude oil is struggling to develop momentum, and WTI spots are trading near 67.80. WTI spot prices are getting tugged around the map as the US’ consistent overproduction is applying greater and greater pressure on prices despite the OPEC’s best efforts to cut off supply to give demand a chance to catch up. The US Energy Information Administration (EIA) reported a build-up of another 6.2 million barrels of crude on Wednesday, bringing the running total to over 435 million barrels.
Gold remains under pressure after the Federal Reserve left unchanged the overnight rates, while Fed Funds futures keep pointing to two more rate hikes this year. Gold is navigating the lower bound of the range prevailing since the start of the year, threatening to break below the critical support at $1,300 the figure, always against the backdrop of a robust demand for USD.