The U.S. Dollar is trading mostly tight ranges in anticipation of the Federal Reserve’s policy announcement at 2 o’clock.
Overview
After economic indicators supporting the case for delaying cuts have made their way into lowering the chances for a “dovish” policy, the questioning of Fed Chairman Jerome Powell will be one to watch during his press conference. Recent analysis has determined that one factor to blame for the lack of cuts materializing was early word from Powell about the Fed’s thinking last year, thus why he will be under pressure about the Fed’s ability to foresee a time when lowering interest rates is appropriate. The slowdown of the U.S. economy that would necessitate stimulus just is not coming to fruition, so what is in the mind of officials going forward is questionable.
April’s ADP Employment Change figures revealed further growth in the labor sector, with an added 192K payrolls versus 183K expected. At the same time, the month prior’s reading was upwardly revised from 184K to 208K. Post-Fed, the biggest risk event of the week will be the Employment Situation coming out Friday.
What to Watch Today…
- US Nonfarm Payrolls, Friday 8:30 AM
- Monex USA Online is always open.
MXN ⇑
The Mexican Peso was the only significant mover, with a half percent gain over the Buck after it has been mostly trading the opposite way. In April alone, the southern neighbor’s currency fell by 3.0%, eating away at the gains it had made against the USD for the year that had made it one of the very few exceptions in overcoming the Dollar’s dominant Q1 rally. We will get Banxico’s central bank policy decision on May 9th and see if they delay further interest rate cuts after conducting one in March.
JPY ⇑
The Japanese Yen has been looking to mount a comeback after collapsing to its weakest point in over 34 years. Global traders thought that reaching multi-decade lows would mean a more determined Bank of Japan pushing to hike borrowing costs, but it does not seem to be planned. FX intervention, the costly endeavor that already the BOJ has tried and has been talked about if certain levels hit against the Buck, is not something the BOJ seems to be capable of pulling off. Expect more talk about central bank coordination to alleviate losses to the Dollar as it is clear the BOJ desires some action, but it may need some aid and coordination from others. Korea could be one.
