Dollar Stays On The Backfoot To Start The Session

Focus shifts to the Bank of England

GBP: After the Federal Reserve's decision to maintain rates, the focus shifts to the Bank of England and other central banks' decisions today. The Dollar weakened, boosting GBP/USD and EUR/USD, with market speculation on the BoE rate stance and forward guidance. The BoE is widely anticipated to keep interest rates unchanged at 5.25% as the United Kingdom’s core Consumer Price Index (CPI), which is the preferred inflation measure of policymakers, is growing by more than twice the required rate of 2%. Investors will look for clues about when the BoE will start lowering key borrowing rates. Currently, expectations are firm for a rate cut in the August policy meeting. BoE’s guidance on interest rates could be slightly dovish as price pressures grew at a slower pace than market expectations in February. Annual headline and core inflation softened to 3.4% and 4.5%, respectively. It will be interesting to watch whether recent soft inflation figures have changed the views of Monetary Policy Committee (MPC) members Catherine Mann and Jonathan Haskel.

Data

BOE Interest rate decision, Exp: 5.25%

Monetary Policy Report: 12pm

EUR/USD breaks the $1.0900 barrier post FED decision

EUR: The Dollar fell against the Euro after the Federal Reserve (FED) delivered what markets interpreted as a 'dovish' policy update midweek that raised the odds of a June interest rate cut. EUR/USD extends its gains for the second consecutive session as the US FED maintained its benchmark rates at 5.5% during Wednesday's policy meeting. The pair rises to near $1.0930 during Asian trading hours today. In the post-meeting press conference, FED Chair Jerome Powell's remarks, indicating a dovish stance, further weighing down the Greenback. Powell underscored that while inflation is exhibiting signs of moderation, the persistent nature of price growth remains a significant concern the FED cannot overlook. This morning the Swiss National Bank (SNB) cut interest rates by 25bps a decision that only a minority of the market had priced in, this could raise speculation that the ECB might want to cut rates too.

Data:

SNB Press Conference: 9am

SNB Interest rate decision: (25bps cut) 1.5% Base rate

HCOB Services PMI(Mar), Exp: 50.5

HCOB Composite PMI(Mar), Exp: 49.7

US Dollar struggles to find demand in FED aftermath

USD: The US Dollar (USD) suffered large losses against its major rivals in the American session on Wednesday as investors reacted to the FED policy decisions and FED Chairman Jerome Powell's remarks on the policy outlook. The USD struggled to find demand early today. Investors await the Bank of England's (BoE) policy announcements and S&P Global PMI data for Germany, the Euro area, UK and the US. The US economic docket will also feature the weekly Initial Jobless Claims and Existing Home Sales data for February. The Fed's revised Summary of Projections showed that policymakers still expect a total of 75 basis points reduction in the policy rate in 2024. USD/JPY gathered bullish momentum and came within a touching distance of ￥152.00 in the American session on Wednesday. The pair staged a deep correction in the early Asian session and declined below ￥150.50 before regaining its traction.

Data

Initial Jobless Claims (Mar): 13:45pm

Fed's Barr speech: 16:00pm