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Currency Market Analysis

Apr 29, 2020 | Currency Market Analysis

Global Themes

USD nears six-week lows ahead of Fed tonight

The US dollar was weaker ahead of tonight’s US Federal reserve meeting.

The greenback, as measured by the US dollar index, fell back to two-week lows before the Fed’s big policy meeting.

While most analysts expect the Fed to be a non-event, the US central bank’s forceful reaction to the COVID-19 crisis, which has seen rates cut to record lows, a new money-printing program and new funding lines for corporates and financial institutions, means markets remain prepared for anything.

Some analysts have called for a potential move to negative interest rates in the US while others have suggested the Fed buy US equites to boost market sentiment.

JPY stronger

The USDSGD fell 0.1%.

The EURSGD was down 0.1% while the JPYSGD climbed 0.2% thanks to a stronger Japanese yen.

Forwards, not backwards

In today’s trade, markets will be looking to the Australian March-quarter inflation number due at 9.30am.

The market is looking for a rise in the annual headline rate to 2.0% -- the highest rate in almost two years.

However, with the global economic shutdown to have a massive impact on demand, markets will likely overlook today’s announcement.

Similarly, US GDP is due tonight, but again, markets are focused on more forward-looking data. The market expects a 3.9% contraction in annual terms.

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