Currency Market Analysis

May 02, 2019 | Currency Market Analysis

Global Themes

USD jumps as Fed calms US cut hopes

The US dollar was higher after the US Federal Reserve remained mostly positive on the US economy.

At its six-weekly policy meeting, the Fed said: “We think our policy stance is appropriate at the moment; we don’t see a strong case for moving it in either direction.”

Before the meeting, one US rate cut has been fully priced in by the end of 2019. After, the probability had fallen to 80%.

The Fed’s commentary boosted the greenback with the US dollar index climbing back towards two-year highs.

GBP higher

The British pound climbed to two-month highs overnight after UK prime minister Theresa May signal an agreement was closer on Brexit after talks between the UK government and Labour opposition.

The Japanese yen climbed to one-month highs as markets moved into safe havens” while the euro slipped from two-week highs as the stronger USD pressured the European currency.

Europe focus

The focus shifts to Europe tonight with European manufacturing numbers due, with close attention likely to be paid to German numbers.

German economic data has weakened over the last six months

Later, the Bank of England meets with high inflation still causing markets to consider that a UK rate hike is a possibility this year.

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