North American Summary and Highlights 18 Mar
Overview - The USD was firmer on a strong PPI, Middle East risks and post-FOMC comments from Fed’s Powell.
North American afternoon
The FOMC left rates unchanged as expected with the median dots unchanged (if slightly more hawkish in the detail). GDP and inflation forecasts were revised higher. The statement saw few changes other than to note the implications of the situation on the Middle East were uncertain. The USD saw a marginal dip though this was more than fully reversed in Chairman Powell’s press conference, who stressed that without progress on inflation in goods that were inflated by tariffs easing would not be seen. USD/JPY advanced to 159.75 and EUR/USD fell to 1.1475. EUR/CHF gains continued, briefly topping .91. AUD and CAD slipped as Powell spoke, but only marginally below their earlier lows versus the USD.
European session
Ahead of the FOMC the USD was stronger supported by a stronger than expected US PPI for February, up 0.7%, 0,.5% ex food and energy, as well as higher oil prices as Middle East tensions increased after an Israeli attack on an Iranian gas field. USD/JPY advanced a big figure to touch above 159.50 while EUR/USD touched below 1.15 from 1.1550. EUR/CHF was firmer at .9085 from .9060 but gains in EUR/GBP faded.
The Bank of Canada left rates unchanged but saw increased downside risks to growth and upside risks to inflation, the growth risks reflecting recent data as well as geopolitical risk. Gains in USD/CAD were corrected leaving it little changed near 1.37, though AUD/USD also found support near .7050 after a dip from 0.71.