Forex – Dollar Steadies Ahead Of Fed; China Trade Deal Inches Closer– Wednesday, May 1, 2019

 

Public holidays and the approach of the Federal Reserve’s monetary policy statement are keeping a firm lid on foreign exchange movements early Wednesday, with the euro holding on to most of its gains after a stronger-than-expected first quarter GDP report on Tuesday.

 

With Japan and much of Europe closed, the Fed’s statement, due at 3 PM ET (1800 GMT) and Chairman Jerome Powell’s subsequent press conference will likely overshadow everything else in the market on Wednesday.

 

A decision to keep official rates unchanged is a foregone conclusion, so market focus is likely to be on the Fed’s interpretation of last week’s GDP report. Analysts argued that the underlying dynamic of the economy was weaker than the annualized growth figure of 3.2% suggested, but not weak enough to warrant cutting interest rates, as President Donald Trump has called for.

 

At 03:00 AM ET (0700 GMT), the euro was at $1.1223, up less than 0.1% from late Tuesday in New York, amid suspicions that the Eurozone GDP report on Tuesday may not have been as strong as it looked.

 

“While very near-term risks from Brexit and Italian politics have receded, we think they are likely to remain present until the end of the year,” Barclays analysts wrote in a note to clients.

 

They said it’s more likely that growth will slow again rather than pick up from the first quarter’s 0.4%.

 

The British pound, meanwhile, was holding just above $1.3000 after the opposition Labour Party refused to throw its weight behind a second Brexit referendum in its campaign to the EU parliamentary elections later this month.

 

The dollar index, which measures the greenback against a basket of six major currencies, was at 97.205, effectively unchanged.

 

Elsewhere, the prospect of the U.S. and China striking a trade deal appears to have risen, after reports that the U.S. had dropped one of its key demands – its insistence that China stop alleged instances of cyber-theft. The Financial Times’s sources told it that this made a watered-down trade deal more likely.

 

“Talks cannot continue indefinitely, and both sides need a win,” said Helen Thomas, founder of the consultancy Blonde Money in Oxford. President Donald Trump “might not always get everything he wants,” she said, pointing to his past negotiations with Mexico and North Korea, “But that doesn’t matter to him. As long as he can sell it as a win, it doesn’t matter about the finer points.”

 

The Article & News Update Is Edited & Published & Contributed By Alaa Tabib Senior Technical Analyst Gulf Brokers DMCC A Regulated & Licensed Broker by SCA & DGCX & UAE Laws
For Further Services & Or Information, Please Do Not Hesitate To Contact Our Expert Alaa At DGCX@Gulfbrokers.Ae   
Reuters & CNN & CNBC May Have Contributed To This Article

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