Fed Maintains Status Quo Ahead of ECB

The Federal Reserve’s Federal Open Market Committee announced on Wednesday that it would leave monetary policy unchanged in order to give the U.S. economy time to improve; the statement also cited a too high unemployment rate. It was less than a month ago that analysts and policy watchers had begun speculating that the Fed’s ultra-loose policy might soon be scaled back as economic data including improvements to the key housing sector showed some improvement. One currency strategist in New York doesn’t foresee any tapering off of the Fed’s asset purchase plan until sometime next year.

With the news, the Euro edged higher against the greenback to trade at $1.3212, a gain of 0.35%, even despite the May Day holiday in most of Europe. Where the EUR/USD pair will head is the question for investors as the ECB policy meeting looms; analysts expect that Mario Draghi, the ECB head, could hint at a future interest rate cut though a small minority continue to hold out for an announcement later today. Looking beyond the ECB meeting, investors will await Friday’s non-farms payroll data for April for additional clues about the U.S. economic health. Often viewed as a gauge of the official government’s report, ADP reported on Wednesday that only 119,000 new jobs were added last month, well below expectations of a rise to 150,000 from March’s 131,000.