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The FxPro Analyst Team

US Fed Expected to Maintain a Hawkish Hold on Rates

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At 08:30 GMT, UK Construction PMI (Apr) will be out with an expected headline number of 50.5 from 47.0 prior. The consensus is for a recovery in the numbers today, after a softening from the high created in December at 53.1. The industry has slipped below 50.0 from the high level of 64.6 reached in 2014, showing a contraction in the index. GBP pairs may see an impact from this data release.

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At 09:00 GMT, Eurozone Unemployment Rate (Mar) is expected to be unchanged at 8.5%. The Unemployment Rate is expected to remain in line with last month’s reading, at a level not previously seen since April 2009. Gross Domestic Product s.a. (QoQ) (Q1) is expected to be 0.4% against 0.6% previously. Gross Domestic Product s.a. (YoY) (Q1) is expected to be 2.5% against 2.7% previously. GDP estimates are also down on the previous reading but, as these are quarterly figures, the decline can be explained somewhat by severe weather in Europe. EUR crosses may be impacted by this data release.

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At 12:15 GMT, US ADP Employment Change (Apr) is expected to be 200K against 241K previously. This data has remained above 200 for the last four months, showing that the US economy is continuing to add jobs, but this reading is expected to show a decline to that number today. USD pairs may be moved by this data.

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At 15:30 GMT, German Buba President Weidmann will deliver a speech titled “Central bank communication as a Monetary Policy Instrument” at the Centre for European Economic Research, in Mannheim. EUR crosses may be moved by this data.

At 18:00 GMT, The US Fed’s Monetary Policy Statement and Interest Rate Decision will be released, with the rate expected to be left unchanged at 1.75%. The hike in rates in March had been more or less priced into markets and marked the first in a series of expected increases in 2018. The market is pricing in two to three hikes in 2018, with a slight bias for three to four that could strengthen the dollar position. The Monetary Policy Statement is expected to set a hawkish tone and may catch some in the market off guard. There will not be an FOMC Press Conference after this event. USD crosses may experience volatility during this time.

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