FOMC keeps the markets guessing

Currencies Direct April 30th 2015 - < 1 minute read

The Federal Open Market Committee (FOMC) delivered its monthly statement on interest rates last night (29 April). There wasn’t too much new information, but just enough to put the brakes on the US dollar sell-off that we’ve seen over the last few days.

In the last week, the dollar has weakened severely against the pound and the euro. This is down to the markets pushing back the expectations of a US rate rise (from June to September and finally to December). 

The tone that the US Federal Reserve adopted suggests that it’s still on track to raise interest rates this year, and in its opinion the recent weak economic data is transitory. That means that future economic data releases, especially those related to the labour market sector and wage growth, will be key focal points.

On which note, later today (30 April) we’ll get US inflation data in the form of the Personal Consumption Expenditures index, which is expected to show an increase of 0.2% in March. This info will be closely examined because it’s a significant inflation indicator for the FOMC. It will also give clues as to wage growth – one of those key indicators of a move towards a rate rise.

 

Right into the Eurozone

Eurozone inflation figures are also out today, which should show us that the Eurozone has moved out of deflation in April and that unemployment has fallen further.

This could help the euro strengthen across the markets, but keep an eye on Greece’s performance at the negotiation table today because that will also have a significant effect. 

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