The US dollar losing gain in the market against the majors Upon the completion of the Federal Open Market Committee’s two-day April meeting, the Fed removed all calendar references on the timing of an interest rate hike.
The Federal Reserve on Wednesday pointed to weakness in the U.S. labor market and economy, in a sign that the central bank is struggling to proceed with its plans to raise interest rates this year.
The Fed’s policy statement puts it on track to begin a meeting-by-meeting approach toward deciding when to pull the trigger on its first rate hike since June 2006.
The central bank, however, acknowledged soft patches across the economy, making it more likely that it will not be ready to hike rates until at least September.
“The committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term,” the Fed said in its statement, following a two-day meeting of its policy-setting committee.
The Fed’s rate guidance mirrored what it gave last month.
But unlike its March policy statement, this time the central bank did not effectively rule out hiking rates at its next meeting.
While that makes a June move possible, the economic data is not cooperating.
The economy grew at an anemic 0.2 percent annual rate in the first quarter, the Commerce Department reported early on Wednesday, well below economists’ expectations for 1 percent growth and the fourth quarter’s 2.2 percent expansion.
The Fed acknowledged that economic growth “had slowed during the winter months, in part reflecting transitory factors.” In March, the Fed described growth as having moderated somewhat.
News came from the Office of National Statistics in UK that unemployment has fallen to its lowest rate since July 2008.
That means the unemployment rate has fallen to 5.6%, in line with forecasts.
Average weekly earnings in the three months to February, excluding bonuses, rose by 1.8% compared with the same period a year earlier.
Growth was slightly lower than the rate in January. When bonuses are included, weekly earnings rose by 1.7%.
The number of people claiming Jobseeker’s Allowance in March fell by 20,700 to 772,400, the ONS said.
Martin Beck, senior economic advisor to the EY ITEM Club, said: “The story of the UK labour market has long been a ‘jobs-rich’ but ‘pay-poor’ one. The latest numbers are no exception with good news for those looking for work, but less so for those already in employment.”
Samuel Tombs, senior UK economist at Capital Economics, said the UK’s “employment miracle shows no signs of drawing to a close” and expected the jobless rate to continue falling further in the coming months.
That means we will see more support to the GBP against the majors in the future i guess, let us wait and see how that news will effect in the global market.
Crude prices have been slowing gaining into the weekly inventory reports on hopes the big gains in oil stocks could be easing. And currently trade at $56.03 after reaching high at $56.67 today.
On the New York Mercantile Exchange, for May delivery rallied $1.68, or 3.15%, to trade at $54.97 a barrel during U.S. morning hours, the highest level since January 2. Prices were at around $54.06 prior to the release of the inventory data.
The U.S. Energy Information Administration said in its weekly report that U.S. crude oil inventories rose by 1.3 million barrels in the week ended April 10, below expectations for an increase of 4.1 million barrels.
Total U.S. crude oil inventories stood at 483.7 million barrels as of last week, the most in at least 80 years, underling concerns over a supply glut.
The report also showed that total motor gasoline inventories decreased by 2.1 million barrels, compared to expectations for a drop of 0.2 million, while distillate stockpiles rose by 2.0 million barrels.
A day earlier, Nymex oil jumped $1.38, or 2.66%, to close at $53.29 amid speculation an ongoing collapse in rigs drilling for oil in the U.S. will result in lower production.
U.S. oil futures have been well-supported in recent sessions amid mounting expectations that U.S. shale oil production has peaked and may start falling in the coming months.