On Wednesday, the Federal Reserve kept interest rates unchanged, emphasized the strength of the U.S. labor market and downplayed soft first-quarter economic growth in its statement following the end of the two days policy meeting. Furthermore, it believes the recent slowdown in U.S. growth is likely to be temporary as it stayed on course for a further rise in short-term interest rates as soon as next month.
In addition, the Fed confirmed that the U.S. consumer spending continued to be solid. Expectations for an increase in U.S. interest rates in the June shot up to 90% from 70%.
Euro failed to settle at $1.09 negatively affected by a strong U.S. data as the U.S. private sector added 117k jobs in April. Markets await Friday’s non-farm payroll as the U.S. economy could add 185k jobs and the unemployment rate increase to 4.6% from 4.5%. Technically, the common currency could re-test $1.09, despite strong USD, as the Greek debt crisis could be resolved.
Gold prices declined materially and fell as much as 1%, to settle at $1,240. Technically, rising US bond yields will make traders abandon gold for a while, however; the precious metal is still desirable due to the Geopolitical tensions in the Far East.
Oil extended losses yesterday as the U.S. inventories remained large. U.S. crude declined to $46.60.
The most important economic events:
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