North American Summary and Highlights 1 May

North American session

The USD finished slightly weaker against most currencies, after correcting from sharp losses that followed the FOMC statement and comments from Fed’s Powell at the press conference. USD/JPY, after moving with other currencies in response to the FOMC, did however see a fresh sharp slide to near 156 after the equity close. 

The FOMC statement noted a lack of recent progress on inflation and announced a tapering of QT starting in June, with other adjustments to the statement minor. This saw the USD slightly weaker and losses were extended when Powell stated that the next move was unlikely to be a hike. USD/JPY tested 157 while EUR/USD peaked at 1.0733. However by the end of the session USD losses and equity gains were largely reversed, some noting a Powell comment that left open the possibility of higher rates, though UST yields remained lower, particularly at the front end.

Ahead of the FOMC, data had a limited impact. ADP employment was slightly stronger than expected with a rise of 192k, but JOLTS data showed a 325k fall in job openings and the ISM manufacturing index was weaker than expected at 49.2, though with a stronger prices paid index of 60.9. There was not much reaction to the data but USD/JPY did see a dip to 157.40 with UST yields, more on relief at refunding details were auction sizes were left unchanged  than the data. 

European morning session

The USD edged slightly lower in a quiet holiday-thinned European morning. EUR/USD gained around 15 pips to 1.0670, and other European currencies mostly kept pace, as did the AUD, while the CAD lagged behind slightly. USD/JPY was not much changed but remained slightly bid below 158.

Other than the UK, pretty much the whole of Europe was on holiday, and there was no data of any note. UK final manufacturing PMI was revised up modestly, but was still down on the month, while UK Nationwide house prices were weaker than expected in April, falling 0.6% m/m.