Forex news for North American trade on May 2, 2018:
- FOMC holds interest rates in 1.50%-1.75% range, as expected
- The May 2018 FOMC full statement from the Fed
- April ADP US employment 204K vs 198K expected
- Cambridge Analytica to shut down - report
- Brexit: UK cabinet rejects customs partnership model
- China official: China is much more able than US to handle a trade war
- Saudi oil minister: Output cuts will continue until end of 2018
- EIA weekly oil inventories +6218K vs +1229K expected
- ISM April New York manufacturing business conditions 64.3 vs 54.0 prior
Markets:
- Gold up $1.30 to $1305
- WTI crude up 47-cents to $67.72
- S&P 500 down 19 points to 2635
- US 10-year yields up 1 bps 2.97%
- AUD leads, EUR lags
The main drama of the day was the FOMC decision. It led to a quick round of US dollar selling because the Fed highlighted the symmetrical natural of its target. The thinking is that's a hint the Fed will let inflation run a bit above target, rather than making 2% a ceiling. That's dovish and the dollar sold, falling 30-50 pips across the board.
An hour after the release, the market decided that the subtle shift wasn't a big signal and the dollar continued its 3-week rally by hitting new extremes against the euro and pound. Cable dumped as low as 1.3555 and is nearing the 200-dma at 1.3535.
EUR/USD will close below 1.20 and is currently trading around 1.1944 after bouncing to 1.2025 on the decision.
The commodity currencies bounced around all day. The loonie climbed to 1.2882 early then dropped to 1.2834, bounced back to 1.2860 then fell to 1.2810 before a final climb to a late session high of 1.2882 after the Fed.
So far, AUD/USD has held Tuesday's lows but the latest drop down to 0.7488 from 0.7538 isn't exactly inspiring, nor is the late drop in equity markets.
In the day ahead, keep an eye out for trouble in emerging markets. That's helping to put a broad bid into the US dollar.
