The US$ remains under some pressure as markets await the US Federal Reserve’s first economic projections since the coronavirus pandemic impacted global economies. The FED is expected to have an upbeat tone, keep rates on holds and will likely address the rising US treasury yields. The statement is expected at 6pm EST and will be followed by a news conference with the Fed Chairman. Chinese CNY and Asian currencies are up ¼% vs US$ or stronger, AUD & NZD have both rebounded almost ½% vs US$. Major currencies are mixed with GBP & Euro flat vs US$, while CHF & JPY both rallying almost 0.4% vs US$. US$ remains under pressure with speculation that the FED may announce more steps to check the recent rise in bond yields. A long side the FOMC, US CPI data will be released this morning and will provide initial direction.
Oil prices eased 2% overnight despite OPEC confirming output cuts will continue until July. Rising crude inventories in the US is reviving concerns that about weak consumption demand due to the coronavirus crisis. C$ is holding around the 1.34 level supported by a weaker US$, offsetting falling oil prices. Intraday the US EIA crude oil stocks change in the afternoon will be monitored for its impact on oil prices. C$ has rallied over 2.5% vs US$ this month, intraday expect C$ to remain within its current trading band with 1.3370 support if breached 1.3200 next, with resistance at 1.3460.
Euro is stable remaining within a relatively tight range ahead of the US Inflation number and the Fed interest rate decision today. No key data out of Europe today, but several ECB members will be speaking today and could have a small impact on rates. In the background ongoing trade talks between the US/EU remain stalled, with potential tariffs on European goods entering the US may impact the European economy. US CPI and FOMC will direct the US$ today as support remains at 1.1240 and key resistance at 1.1490 (March 9 highs).
GBP rebounds curtesy of a weaker US$ vs a rallying pound and is sitting at its highest level since March 9th. The UK PM is laying out the countries next steps in reopening the economy, but the “slow return to normal” is impacting the GBP. The FOMC is the primary driver of weaker US$ and its comments today will dictate direction going forward. Support 1.2650 with resistance at 1.2850 a break leads to a possible extension to 1.3199 vs US$ (March 9th high)