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Breaking news

Federal Reserve Leaves Interest Rates Unchanged, Maintains Monthly Asset Purchases

Real Time News
  • Fed's Powell: - High inflation prints not "what we were looking for" - Spike in inflation driven solely by supply side shock
  • Fed's Powell: - We expect RRP activity to remain elevated - Repo facilities performing as expected
  • Fed's Powell: - MBS and tapering were brought up by a number of FOMC participants - We will taper both (MBS & Treasuries) at the same time most likely
  • Fed's Powell: - Strong capital requirements are a "must" for banks, especially the largest banks - Capital requirements allow banks to continue to perform during severe downturns
  • The July FOMC press conference is hammering home this point: the labor market mandate is now on equal footing with the inflation mandate (which is atypical); and Powell is now making the case that the labor mandate is *more important* to normalization than the inflation side. https://t.co/saAmTwpTRw
  • Fed's Powell: - Fed has not made a decision on when taper will commence - Variety of opinions with in the Committee on when tapering should begin
  • Fed's Powell: - Transitory means not impacting longer-run inflation patterns - We must be extremely careful when it comes to the inflation mandate
  • Fed's Powell: - Fear of COVID and unemployment benefits are keeping people from working - Such a high vacancy-to-unemployed ratio is rare
  • Fed's Powell: - We are not looking at raising rates, but instead asset purchases - Ideally you would not be raising rates before tapering
  • @CVecchioFX @RiskReversal @GuyAdami Gold is headed back to the bar for another bender #LowerForLonger
Graphic Rewind: USD Bulls Lose Confidence Ahead of Friday NFP Release

Graphic Rewind: USD Bulls Lose Confidence Ahead of Friday NFP Release

Baruch Spier,

Talking Points:

  • Greenback index falls to a 9-day low after weak GDP release
  • Euro takes gains against USD despite inflation miss

A look back at the past 24 hours of Forex trading using movements in the US Dollar Index:

US Dollar 15-Minute 12:00 04/28 to 12:00 04/29 EST

Graphic Rewind: USD Bulls Lose Confidence Ahead of Friday NFP Release

Charts created by Baruch Spier using Marketscope 2.0. Add the Trading Session Hours Indicator to your own Forex charts atFXCM Apps.

The Dow Jones FXCM Dollar Index fell to a 9-day low in today’s trading, as disappointing US GDP data may be eroding greenback traders’ confidence ahead of the upcoming FOMC rate decision and the Non-Farm Payrolls releases.

Overnight trading between Tuesday and Wednesday, we heard that the Bank of Japan decided to keep its monetary asset purchases unchanged at an annual rate of 60-70 trillion Yen. There was no initial USD/JPY reaction to the decision, but the Yen took about ten pips of gains against the US Dollar on an announcement that the BoJ had lowered its GDP forecasts.

On the news that Euro-zone inflation slightly missed expectations for April, the Euro initially took a small dip to a 3-week low against the dollar before erasing all of those losses and eventually rising to a new daily high. The Euro gains may have been the result of the annual core inflation rate meeting expectations at 1.0%.

Finally, the US Dollar began its decline following the announcement that the US economy expanded by a mere 0.1% (annualized) in the first quarter, coming in severely lower than expectations for 1.2% GDP growth. USD/JPY dipped 30 pips on the release, and the dollar has continued to post losses in the Forex markets, as greenback traders may have lost some confidence in a strong April Non-Farm Payrolls number this Friday.

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-- Written by Baruch Spier, DailyFX Research. Feedback can be sent to instructor@dailyfx.com .

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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