Federal Reserve Keeps Interest Rates Unchanged

USD
On Wednesday, the Federal Reserve kept interest rates unchanged, emphasized the strength of the U.S. labor market and downplayed soft first-quarter economic growth in its statement following the end of the two days policy meeting. Furthermore, it believes the recent slowdown in U.S. growth is likely to be temporary as it stayed on course for a further rise in short-term interest rates as soon as next month.

In addition, the Fed confirmed that the U.S. consumer spending continued to be solid. Expectations for an increase in U.S. interest rates in the June shot up to 90% from 70%.

• The dollar index (DXY), which measures the greenback against a basket of currencies, rose as much as 0.5% to settle at 99 pips backed by FOMC statement. Meanwhile, the Greenback is awaiting Nonfarm payrolls, which will be released this Friday.

EUR
Euro failed to settle at $1.09 negatively affected by a strong U.S. data as the U.S. private sector added 117k jobs in April. Markets await Friday’s non-farm payroll as the U.S. economy could add 185k jobs and the unemployment rate increase to 4.6% from 4.5%. Technically, the common currency could re-test $1.09, despite strong USD, as the Greek debt crisis could be resolved.

Gold
Gold prices declined materially and fell as much as 1%, to settle at $1,240. Technically, rising US bond yields will make traders abandon gold for a while, however; the precious metal is still desirable due to the Geopolitical tensions in the Far East.

Oil
Oil extended losses yesterday as the U.S. inventories remained large. U.S. crude declined to $46.60.

The most important economic events:

• EUR ECB's Draghi Speaks in Lausanne, Switzerland: (GMT 15:30) – Important
• CAD Bank of Canada Governor Stephen Poloz Speech in Mexico: (GMT 20:25) – Important

Disclaimer
The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.