Forex Today: US Dollar surges amid Fed's hawkish hold in Powell’s last meeting
Here is what you need to know for Thursday, April 30:
The US Dollar Index (DXY) is trading near the 99.00 price zone on Wednesday after the Federal Reserve (Fed) decided to keep interest rates on hold. This was Chairman Jerome Powell's last meeting as head of the Fed.
The vote in favor of the policy was 8-4, the most divided Federal Open Market Committee (FOMC) vote since October 1992, with Governor Stephen Miran dissenting in favor of a quarter-percentage-point rate cut and Beth Hammack, Neel Kashkari, and Lorie Logan voting to hold rates but dissenting against the inclusion of an easing bias in the statement.
United States (US) President Donald Trump threatened to maintain a blockade in the Strait of Hormuz if Iran doesn’t agree with the nuclear terms set by Trump. He also claimed that he “Will knock out the rest of the missiles and systems if we don't make a deal with Iran.”
EUR/USD fell towards the 1.1660 price zone amid broader US Dollar (USD) strength, amid a hawkish Fed hold, and rising energy prices. Investors look forward to the European Central Bank (ECB) meeting due on Thursday.
GBP/USD slid towards the 1.3470 price zone as the pair awaits the Bank of England (BoE), which will also have its interest rate decision on Thursday.
USD/JPY is trading very close to a two-year high at 160.40 as the Greenback surges above all its peers.
USD/CAD is trading near the 1.3680 level on a neutral bias after the Bank of Canada (BoC) left interest rates on hold on Wednesday's meeting.
West Texas Intermediate (WTI) Oil Surged to $106.95 per barrel as US President Trump claimed that he had discussed with various Oil companies continuing the blockade in the Strait of Hormuz, sending the black gold flying. On another note, early on Tuesday, the United Arab Emirates (UAE) announced its decision to leave the Organization of the Petroleum Exporting Countries (OPEC), which had a limited effect in Oil prices.
Gold (XAU/USD) fell towards the $4,540 price zone after investors kept all eyes on the firmer USD
What’s next in the docket:
Thursday, April 30
- China April Manufacturing and Non-Manufacturing PMI
- French Q1 GDP (Preliminary)
- Germany March Retail Sales
- French and Italian April CPI & HICP (Preliminary)
- Germany March Unemployment Rate
- United Kingdom BoE Interest Rate Decision
- United Kingdom BoE Minutes & Monetary Policy Report
- United Kingdom BoE MPC Vote Split
- Eurozone ECB Main Refinancing Rate
- Eurozone ECB Deposit Facility Rate
- Eurozone ECB Monetary Policy Statement
- Canada February GDP
- US Core PCE and PCE Inflation
- US Q1 GDP (Preliminary)
- US Employment Cost Index
- US Initial Jobless Claims
- US Personal Income and Spending
- US Chicago PMI
- New Zealand ANZ Consumer Confidence
- New Zealand March Building Permits
- Japan April Tokyo CPI
Friday, May 1
- Australia Q1 Producer Price Index
- Switzerland March Retail Sales
- Canada April Manufacturing PMI
- US ISM Manufacturing PMI
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
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