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After the Fed kept interest rates constant as expected and Chief Powell ruled out an interest rate hike as the Fed’s next move, the US dollar gave up its gains on Tuesday with falling US yields across the curve.
As US rates reversed following the FOMC meeting, the USD Index (DXY) fell below the 106.00 support level. Weekly Initial Jobless Claims are due on May 2nd, seconded by Factory Orders and Balance of Trade figures.
Key Developments:
The sharp sell-off in the US dollar after the FOMC meeting caused EUR/USD to reverse Tuesday’s decline and rise above 1.0700. On May 2, attention will be focused on the final HCOB Manufacturing PMI for Germany and the euro area in the domestic docket.
Following the sharp drop in the US dollar, the GBP/USD pair recovered the 1.2500 barrier and beyond when the Fed met consensus and held its interest rates steady. On May 2, there won’t be any data releases on the UK docket.
The USD/JPY somewhat reduced Tuesday’s solid performance due to the US dollar’s strong and continued selling tendency as well as the US yield curve’s declining values. On May 2, the BoJ will release its minutes, which will be followed by the consumer confidence index and weekly data on foreign bond investments.
Following the US dollar’s weak tone, the AUD/USD pair managed to launch a strong comeback, retaking the 0.6500 level and beyond. On May 2, preliminary building permits and the balance of trade are anticipated in Australia.
Commodities:
WTI prices continued to deteriorate and fell to seven week low below $79.00 per barrel. In response to fresh Dollar weakening and declining interest rates, gold prices marginally increased and crossed the $2,300 threshold per troy ounce. Similarly, Silver recovered some of its upward momentum and somewhat recovered from the recent sharp decline.
Also Read:
What is behind oil price’s recent decline?
Gold prices surge, US dollar slides following FOMC decision
Powell speaks on policy outlook after FOMC decision
Powell still seeks assurance that further progress on inflation is achieved
Federal Reserve Keeps US Interest Rates Unchanged
Gold stabilized below $2,300 ahead of Fed decision
