30/04/2021
🌎📊Will Fed Snap U.S. Dollar’s Recovery?
After selling off throughout the month of April, the greenback finally rebounded on the eve of the Federal Reserve’s monetary policy announcement. The U.S. economy is running hot ahead of the rate decision, but no changes are expected from the central bank, which explains why the U.S. dollar pulled back this month despite good data. The question for tomorrow is whether the Fed will stick to script and say that it is still waiting for “substantial further progress” in the economy or finally acknowledge that its goals could be met sooner than anticipated.
The strength of the U.S. recovery is undeniable, with jobless claims at pandemic lows, consumer confidence at 14-month highs, house prices soaring, and retail sales rising at their strongest pace since May of last year. April can be a very strong month for job growth, with more hiring to follow as the travel industry prepares for a strong recovery.
For now, vaccination rates in Europe are slow and some countries in Asia are reintroducing restrictions instead of rolling them back like the U.S. This means that in the near term, even after an FOMC pullback, the U.S. dollar should outperform. The first-quarter GDP on Thursday will highlight the robustness of the U.S. recovery.
Also, the U.S. dollar traded sharply higher versus the Japanese Yen, Australian, and New Zealand dollars, but saw little to no gains against the euro, sterling, the Swiss Franc, and the Canadian dollar. Currently, the situation in Europe is grim, but every day, more people are getting vaccinated.
The Australian and Canadian dollars will also be in focus, with Australian CPI and CAD retail sales scheduled for release. Both countries are expected to report strong data. Canadian retail sales should rebound sharply along with Australian price pressures.
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