Here is what you need to know on Thursday, April 30:
The US Dollar (USD) rallied late Wednesday, fuelled by the Federal Reserve’s hawkish hold and surging crude Oil prices. Early Thursday, the USD Index holds steady near 99.00 as market focus shifts to the Bank of England’s (BoE) and the European Central Bank’s (ECB) monetary policy announcements. Additionally, the economic calendar will feature first-quarter Gross Domestic Product (GDP) prints from Germany, the Eurozone and the US. Weekly Initial Jobless Claims and March Personal Consumption Expenditures (PCE) Price Index data from the US will also be watched closely by market participants.
US Dollar Price This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.16% | 0.18% | 0.66% | -0.08% | 0.10% | 0.54% | 0.51% | |
| EUR | -0.16% | 0.05% | 0.45% | -0.17% | -0.03% | 0.41% | 0.38% | |
| GBP | -0.18% | -0.05% | 0.43% | -0.23% | -0.08% | 0.37% | 0.32% | |
| JPY | -0.66% | -0.45% | -0.43% | -0.69% | -0.51% | -0.01% | -0.06% | |
| CAD | 0.08% | 0.17% | 0.23% | 0.69% | 0.24% | 0.69% | 0.59% | |
| AUD | -0.10% | 0.03% | 0.08% | 0.51% | -0.24% | 0.43% | 0.40% | |
| NZD | -0.54% | -0.41% | -0.37% | 0.00% | -0.69% | -0.43% | -0.03% | |
| CHF | -0.51% | -0.38% | -0.32% | 0.06% | -0.59% | -0.40% | 0.03% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
The Fed left its policy rate unchanged at 3.5%-3.75% as widely anticipated but the policy statement highlighted an unusually divided vote. Fed Governor Stephen Miran voted in favor of a 25 basis points (bps) rate cut, as he did at every policy meeting since joining the central bank back in September. More importantly, three members of the Federal Open Market Committee (FOMC), Beth Hammack, Neel Kashkari and Lorie Logan, said they agreed with the decision to keep the policy rate steady but voted against the inclusion of an easing bias in the statement.
In the post meeting press conference, Fed Chair Jerome Powell noted that while the majority of the Committee did not want to change the statement language at this meeting, he also acknowledged that the number of policymaker who would support a move away from an easing bias has increased. He further explained that they are in a good position to move in either direction and added that they are still slightly restrictive, sitting at the high end of the neutral rate.
According to the CME FedWatch Tool, markets are currently pricing in no chance of a rate cut by the end of the year, while seeing about a 13% probability of a 25 bps hike. The USD gathered strength against its rivals, with the USD Index gaining about 0.4% on Wednesday, and the benchmark 10-year US Treasury bond yield rose about 2% before settling above 4.4% early Thursday.
Late Wednesday, US President Donald Trump said that they will continue the naval blockade of Iran until a deal with Tehran to address the country’s nuclear program is secured. Trump further stated that he had rejected a recent proposal from Iran to reopen the Strait of Hormuz that would have delayed talks on the nuclear issue until later. The barrel of West Texas Intermediate (WTI) rose more than 8% on Wednesday and was last seen trading virtually unchanged on the day, above $105.
The BoE is anticipated to leave the policy rate unchanged at 3.75% after the April meeting. Investors will pay close attention to comments from Governor Andrew Bailey in the post meeting press conference, starting at 11:30 GMT. GBP/USD struggles to strage a rebound after losing 0.3% on Wednesday and trades near 1.3470.
EUR/USD continued to edge lower after losing more than 0.3% on Wednesday and touched its lowest level in three weeks near 1.1650. The pair holds steady at around 1.1680 in the European morning. The ECB is widely forecast to maintain its policy settings.
USD/JPY rose 0.5% on Wednesday and broke above 160.00 to touch its highest level since July 2024 above 160.50. A report released by the Bank of Japan (BoJ) on Thursday revealed that the impact of weak Japanese Yen shock on inflation is expected to be bigger than that from an oil shock. “The weakening of the JPY pushes up prices for wide range of goods services, thereby gives bigger boost to consumer inflation excluding fresh food, energy.,” the BoJ noted.
Gold rebounds after setting a new April-low near $4,500 on Wednesday and rises toward $4,600 early Thursday, gaining about 1% on the day.
Central banks FAQs
Central Banks have a key mandate which is making sure that there is price stability in a country or region. Economies are constantly facing inflation or deflation when prices for certain goods and services are fluctuating. Constant rising prices for the same goods means inflation, constant lowered prices for the same goods means deflation. It is the task of the central bank to keep the demand in line by tweaking its policy rate. For the biggest central banks like the US Federal Reserve (Fed), the European Central Bank (ECB) or the Bank of England (BoE), the mandate is to keep inflation close to 2%.
A central bank has one important tool at its disposal to get inflation higher or lower, and that is by tweaking its benchmark policy rate, commonly known as interest rate. On pre-communicated moments, the central bank will issue a statement with its policy rate and provide additional reasoning on why it is either remaining or changing (cutting or hiking) it. Local banks will adjust their savings and lending rates accordingly, which in turn will make it either harder or easier for people to earn on their savings or for companies to take out loans and make investments in their businesses. When the central bank hikes interest rates substantially, this is called monetary tightening. When it is cutting its benchmark rate, it is called monetary easing.
A central bank is often politically independent. Members of the central bank policy board are passing through a series of panels and hearings before being appointed to a policy board seat. Each member in that board often has a certain conviction on how the central bank should control inflation and the subsequent monetary policy. Members that want a very loose monetary policy, with low rates and cheap lending, to boost the economy substantially while being content to see inflation slightly above 2%, are called ‘doves’. Members that rather want to see higher rates to reward savings and want to keep a lit on inflation at all time are called ‘hawks’ and will not rest until inflation is at or just below 2%.
Normally, there is a chairman or president who leads each meeting, needs to create a consensus between the hawks or doves and has his or her final say when it would come down to a vote split to avoid a 50-50 tie on whether the current policy should be adjusted. The chairman will deliver speeches which often can be followed live, where the current monetary stance and outlook is being communicated. A central bank will try to push forward its monetary policy without triggering violent swings in rates, equities, or its currency. All members of the central bank will channel their stance toward the markets in advance of a policy meeting event. A few days before a policy meeting takes place until the new policy has been communicated, members are forbidden to talk publicly. This is called the blackout period.
Source: https://www.fxstreet.com/news/forex-today-hawkish-fed-tone-lifts-usd-focus-shifts-to-boe-and-ecb-202604300738
