The US dollar underwent additional volatility during the FOMC monetary policy statement, as the Fed removed the reference to global financial risks but gave a more downbeat assessment of growth and inflation. Policymakers also omitted the mention of the balance of risks, signaling that they might not tighten in June just yet.
EURUSD initially spiked to a low of 1.1275 then jumped to a high of 1.1360, GBPUSD dipped to a low of 1.4475 then landed back above 1.4500, USDCHF is still consolidating around .9700.
The RBNZ decided to keep interest rates on hold at 2.25% as expected but gave their usual downbeat remarks and jawboning attempts, citing that further Kiwi depreciation might be appropriate. On a more positive note, policymakers also acknowledged how the economy is drawing support from migration, tourism, and construction. Governor Wheeler pointed out that the dairy sector is still facing difficult challenges.
NZDUSD found support around .6800 and rallied to .6900 after the announcement, NZDJPY tested the resistance at the 77.00 handle, EURNZD turned upon hitting a high of 1.6537 and is below 1.6400, and GBPNZD is back to the 2.1000 mark.
Lastly, the BOJ refrained from adding to their stimulus efforts, allowing the yen to surge against its forex counterparts. USDJPY dropped below 111.00 to the 109.25 area, EURJPY broke below the 124.00 handle, GBPJPY is down to 158.50, and CADJPY fell below 87.00.
AUD reels from negative quarterly CPI
The Aussie was the weakest performer for the day after Australia printed a 0.2% decline in price levels for the second quarter. Analysts had been expecting to see a 0.3% uptick to follow the previous period’s 0.4% increase.
AUDUSD is down to the .7580 level, AUDJPY broke below 83.00, EURAUD popped up to the 1.4400 major psychological level, GBPAUD rallied to the 1.9150 minor psychological mark, and AUDCAD is down to the .9550 mark.
Up ahead, the US preliminary GDP reading is up for release and a 0.7% growth figure is eyed, half of the previous 1.4% expansion. The BOJ is still set to make its press conference and any indication that they’re open to additional easing in their next statements might force the yen to return its latest batch of gains. Earlier in the day, data from Japan came in mixed, as household spending and retail sales posted declines while the jobless rate and preliminary industrial production reports posted improvements.
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