Fed Keeps Door Open For Further Rate Hikes

Orbex Market Flash

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Over the European morning on Thursday, the US Dollar traded a little higher, putting an end to the losing streak which has dragged on over the last three days.

A fairly light docket for the US session today will see focus on the various Fed members speaking this afternoon. The USD Index traded 96.57 last, with price still down from testing the 97 level last week.

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FOMC Minutes Raise Prospect Of Further Rate Hikes

The FOMC minutes, released yesterday, confirmed the Fed’s concern for the US economy. They also confirmed the view held by many policymakers, that rates could be lifted later in the year if growth picks up again as expected.

US CPI for March, released yesterday, has also helped USD with prices rising by 0.4% month on month, vs 0.3% marking the fastest increase in 14 months.

Brexit Extension Boosting EUR & GBP

EURUSD trades higher today as the recovery off the 1.1217 level continues. Yesterday, the ECB lowered its growth and inflation forecasts in light of the ongoing downturn, both domestic and global. However, for now, EUR remains buoyant as news of a Brexit extension keeps risk sentiment firm.

In the UK, GBP price action remains stagnant as the Brexit debacle continues. Yesterday, the EU agreed to give the UK until October to pass a Brexit deal before leaving the EU. GBPUSD price action reflects the ongoing confusion around Brexit as volatility has totally dried up recently. GBPUSD traded 1.3089 last, just up off the 1.30 base.

Better Risk Appetite on Brexit News

Risk sentiment has been better today as news of the Brexit extension has translated into relief for many investors. The SPX500 has turned higher again with price moving back up towards the 2895.33 weekly high. The UK100 is higher too as UK investors display better demand in light of the Brexit extension. Price now trades 7435.1 after picking up, just shy of testing the 7369.2 level.

Safe Havens Down

With risk sentiment buoyant today, safe havens have come off a little with both gold and the Japanese yen trading lower against the dS Dollar. USDJPY traded 111.11 last as price remains under the 111.76 resistance level. Gold traded 1304.99 last as price turns lower following the five-day winning streak just seen on the rebound of the 1280.58 support level.

Bearish EIA Report Caps Oil Rally

Oil prices are a little lower today following a bearish report from the EIA yesterday which showed a further build in US crude stocks. Along with the weekly report, the EIA also updated its oil outlook for 2019 which now projects a higher increase in US oil production than was previously expected. US crude production has risen to fresh record highs recently while OPEC has signaled that it is considering extending the current production cuts when it meets in June, in a bid to keep price supported.

AUD & CAD Under Pressure

Commodity currencies have both been under pressure today as weaker oil, and a stronger US dollar have outweighed a better risk-on tone in equities markets. AUDUSD is still fighting to break above last week’s .7168 high, trading .7160 last. USDCAD has traded back up to 1.3352, just under the yesterday’s 1.3359 high.

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