The greenback traded within a tight range ahead of the FOMC decision, which saw the central bank keep rates unchanged as expected. However, it rose to a two-month high against the yen and extended its gains against the euro on Thursday after a hawkish-sounding Federal Reserve heightened expectations for an interest rate hike in December.
While the Fed’s latest policy stance was viewed as hawkish for the most part, the central bank did lower again its estimated long-term “neutral” interest rate from 3.0 percent to 2.75 percent, reflecting concerns about overall economic vitality.
The common currency gave in to the bears in spite of Eurozone’s medium tier data beating expectations. German PPI rose 0.2% against a projected 0.1% increase but traders may be hedging their positions ahead of Mario Draghi's speech and also on account of current jawboning by other European Central Bank officials.
Sterling was steady on Thursday, having pulled away the previous day from its highest level since last year’s Brexit vote result, after the U.S. Federal Reserve signalled it would hike interest rates again this year, lifting the dollar across the board. It did however get another boost from upbeat UK retail sales, which reflected 1.0% growth in consumer spending versus the projected 0.2% uptick and the previous reading, which was upgraded from 0.3% to 0.6%. Only lending data is up for release today as traders might hold tight until UK Prime Minister May's Brexit speech.
The Swiss currency had a mixed run as it reacted mostly to its contemporaries. There were no major reports from the country, so the franc mostly reacted to market sentiment. The Swiss trade balance and SECO economic forecasts are up for release today, with the previous predicted to print a small surplus of 2.41 billion CHF.
The Japanese currency has regained some ground against most of its competitors as traders may be hedging their trade before of the Bank of Japan decision. The yen has lost to the dollar, though, as the FOMC set the date for its balance sheet runoff in October and maintained December hike expectations. No actual changes in rates are expected from the Japanese central bank but any downbeat remarks could keep weighing on the yen.
Gold fell to its lowest in nearly four weeks on Thursday as the Federal Reserve signalled it was on track to raise U.S. interest rates again in December, driving the dollar to two-month highs versus the yen. The metal is highly sensitive to rising U.S. interest rates, which boost the cost of holding non-yielding bullion relative to other assets, while lifting the dollar, in which it is priced. Spot gold was down 0.5 percent at $1,295.51 an ounce, having earlier touched its lowest since late August
Oil prices steadied on Thursday, holding most of their recent gains before a meeting of oil producers that could extend production limits aimed at clearing a glut that has depressed the market for more than three years. Brent crude oil was down 5 cents at $56.24 a barrel. U.S. light crude was 15 cents lower at $50.54.
Economic Calendar (all times in GMT)
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