By Jay and Julie Hawk of www.TheFXperts.com
The U.S. Dollar Index (DXY) rallied sharply on Wednesday after the U.S. Federal Reserve raised the Fed Funds rate by +25 bps from 2.25% to 2.50%. The DXY Index, which had hit a low of 96.61 on the day, soon traded as high as 97.06 following the release. The Fed signaled it would limit rate hikes to two in 2019, which comes after nine increases since December of 2015. Fed Chair Jerome Powell stated after the release that, “Policy at this point does not need to be accommodative”.
Elsewhere, UK CPI increased +2.3% y/y, in line with expectations, while Canadian CPI declined by -0.4% m/m, also meeting the consensus. In addition, New Zealand GDP increased by +0.3% q/q compared to an expectation of +0.6%, and the Kiwi Trade Balance showed a deficit of -861M versus an anticipated -880M. Thursday’s numbers had Australian Employment Change increase by +37.0K new jobs versus the +20.0K rise expected, while the Aussie Unemployment Rate inched up to 5.1% from 5.0% and failed to meet the consensus of 5.0%. Wednesday’s highlights also featured the release of the BOJ’s Policy Rate, which remained steady at -0.10%, as well as the BOJ Monetary Policy Statement and Press Conference.
On Thursday, the BOE’s Official Bank Rate is expected to remain at 0.75%, and the Official MPC Bank Rate Votes and the Monetary Policy Summary are also due out. In addition, UK Retail Sales will be released, with an expectation of a +0.3% monthly increase.
The week will conclude with the release of the UK Current Account that is currently expected to show a deficit of -22.2B; Canadian Core Retail Sales and GDP, with an expected increase of +0.3% and +0.2% m/m respectively; and the BOC’s Business Outlook Survey. U.S. numbers out on Friday include: U.S. Durable and Core Durable Goods Orders expected at +1.8% and +0.3% m/m respectively, and Final GDP due out at +3.5% q/q.
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