Market Review, April 28, 2016

Yesterday we saw the dollar move lower against the other major currencies even though U.S. data beat expectations. The sentiment on the dollar remained weak awaiting the Fed’s policy statement that was due later in the evening.

After the Fed held interest rates steady yesterday night, we saw the USD extend its losses. Any rate hike by the Fed this year is viewed bullish for the dollar and bearish for gold.

“The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run,” the FOMC said in the policy statement. “However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.”

Investors were also waiting on the conclusion of the BoJ’s policy meeting about further easing measures.

Overnight the yen soared as the BoJ held off on expanding monetary stimulus as Governor Kuroda decided to take more time to assess the impact of the negative interest rates. This came as a surprise as everyone was expecting for the central bank to take action on the strengthening in the yen. Right after the decision the yen rallied while stocks tumbled.

As investors were awaiting the release of the Fed’s latest monetary policy statement, gold extended its gains.

Crude inventories data were optimistic, pushing oil prices higher. Fed’s decision on rate changes also pushed further higher, hitting new peaks for 2016.

USD/CAD hit 1.2575 during the U.S. trading session, the pair’s lowest since July. The commodity currency remains supported by the climbing oil prices.

Wall Street ended slightly higher after the Fed’s rate decision, but was weighed by Apple shares.

 
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