The US Dollar crept broadly higher as FX investors await the latest statement from the Federal Reserve Bank. That will help traders better gauge the likelihood of an interest rate hike next month. Analysts are predicting that the Fed is likely to maintain the status quo as regards rates, but the question is whether or not the Fed talks down the latest economic data which was largely disappointing. If the Fed does dismiss it out of hand as a one-off, that raises the chance of a June rate increase; currently, the likelihood of one is priced in at about 70% according to the CME FedWatch publication.
As reported at 11:17 am (BST) in London, the GBP/USD was lower at $1.2911, down 0.18%, but well off the session trough set at $1,2884. The EUR/USD was down 0.13% and trading at $1.0914; earlier the pair had hit a low of $1.0907 while the peak was well off at $1.0936. The USD/JPY was up 0.12% to trade at 112.174 Yen, well off the trading day’s peak set at 112.23 Yen.
US Data Disappoints
The latest economic data from the US showed slowing auto sales in April, declining to 16.88M against expectations of a rise to 17.10M. Recently, it was reported that US GDP growth was at the 3-year low for Q1. Today, besides the Fed statement, markets will watch for the PMI reports on services, non-manufacturing and composite, as well as ADP’s release of private sector employment data. Analysts say that the recent soft data has already been priced into the Dollar so, barring any disappointment, the greenback could recover.