29 April, AtoZForex, Lagos – After the Federal Open Market Committee’s (FOMC) decision to leave interest rates on hold yesterday, the dollar has continued bearish, falling to an 11 month low as the decision implied a hawkish surprise in a dovish story. The US GDP report released yesterday also points to the inherent weakness in the US economy, which should keep the dollar lower for now. The US Q1 GDP showed a 0.5% growth. Depicting the U.S. economy expanded in the first quarter at the slowest pace in two years. Much of the weakness can be attributed to a fall in consumer spending as US consumers reduced spending and companies tightened their pockets as well. All in response to weak global financial conditions and a plunge in oil prices.
The yen strengthened across board, gaining over 300 pips against the dollar overnight. All thanks to the Bank of Japan’s (BOJ) decision to hold off further stimulus. As the BOJ Governor Haruhiko Kuroda and his cohorts decided to observe the impact of negative interest rates more before moving further. Many expected instead that the BOJ will alter its current policy, due to the recent strengthening of the yen, which has negatively impacted prospects for higher wages and investment.
Not much is expected today in terms of high impact economic news releases. Like the US, we have the Canada GDP due for release, while we have the Swiss National Bank’s general meeting today as well.
The Canadian economy now seems to be rebalancing. Real gross domestic product rose 0.6% in January, a fourth consecutive monthly increase. Manufacturing, retail trade, and mining, quarrying, and oil and gas extraction were major contributors to growth in January. As oil prices have put up a recovery, the Canadian dollar has also strengthened. Currently trading at a highest level against the dollar for the year so far. The downtrend on the USDCAD is still very much alive and looks set to remain so.
Oil price recovery?
The oil price recovery continued after the latest Crude Oil Inventories report showed a larger rise in stockpiles compared to the previous week. A 2 million-barrel climb, causing oil to rally all the way to $46 and $48 for WTI and BRENT respectively. Could this finally be the long awaited oil price recovery?
Think we missed something? Let us know down in the comments section.