FX News Today
Asia Wrap: Stock markets failed to cheer in Asia, with developers leading declines in Hong Kong in particular, amid concerns over waning momentum in home sales. Japan was closed again for a holiday, the Hang Seng dropped -1.25%, while the CSI 300 managed a 0.23% decline. The ASX outperformed with a 0.76% gain, despite negative leads from Wall Street yesterday, although U.S. stock futures are marginally higher. 10-year Treasury yields meanwhile are down -0.2 bp at 2.966% and the dollar retreated after the FOMC met but did not exceed expectations for a tune-up of the inflation references after recent gains in PCE prices. That left a slightly more dovish imprint than the markets had anticipated.
The FOMC: Left the rates unchanged with a 1.625% mid-point for the 1.50% to 1.75% band. The vote was unanimous. The policy statement noted both overall and core inflation “have moved close to 2 percent. Market-based measures of inflation compensation remain low,” however. On the economy the Fed reiterated it’s been rising at a “moderate rate.” Job gains remained strong, while growth in household spending “moderate from its strong Q4 pace.” Also, business investment continued to grow “strongly.” The FOMC also reiterated it expects “further gradual adjustments in the stance of monetary policy…Inflation on a 12-month basis is expected to run near the Committee’s symmetric 2 percent objective over the medium term. Risks to the economic outlook appear roughly balanced.” The statement was largely as expected and keeps a June hike on track, but it wasn’t overly hawkish such that a fourth rate hike is being priced in.
Charts of the Day
Main Macro Events Today
- UK Services PMI – Expectations are for a rise to 53.5 from a surprise fall last month to 51.7, the construction number beat estimates yesterday but the Manufacturing number was s significant miss.
- EUR Area CPI – National inflation data for April have mostly been lower, with France the notable exception, so a forecast for a steady Eurozone HICP reading of 1.3% y/y has a bias to the downside and a further dip in the headline rate would add to the arguments of the ECB doves that inflation is not on a sustainable path higher yet and remains reliant on ample monetary support. Core figure expected to be 0.9% with bias to the downside too.
- Speech from head of the SNB – Jordan
- US ISM Non-Manufacturing PMI – Expectations a dip to 58.1 from 58.8 last time. Key bell weather of the US services activity
Support & Resistance Levels
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