DXY Stable, Market Focuses on US GDP and PCE
The US dollar index (DXY) held steady around 98.95 during the Asian session on Thursday (April 30th), after the Federal Reserve left interest rates unchanged and the market digested a hawkish policy message. Market participants are now turning their attention to key US data releases that could potentially alter future interest rate expectations.
The Fed on Wednesday maintained its benchmark interest rate in the 3.50%–3.75% range. The 8–4 decision was said to be the most divided since 1992, with some dissenting voices regarding policy communication that was deemed to unnecessarily bias easing.
In his statement, Jerome Powell warned that near-term inflation expectations were rising. He also stated that he would remain on the Board of Governors for an indefinite period, even though his term as Chair ends on May 15th.
The market responded by increasing the probability of a scenario of higher interest rates for longer. The prevailing narrative suggests the market is now pricing in a roughly 55% chance of a rate hike in April 2027, up sharply from around 20% before the decision, according to Reuters.
The next focus will be the preliminary release of Q1 GDP and the March PCE Price Index on Thursday. Stronger-than-expected data could potentially boost the dollar in the short term by reinforcing expectations of tighter policy, while weaker results could trigger a correction if the market reassesses that there is still room for easing.
5 key points:
- The DXY stabilized around 98.95 after the Fed adopted a hawkish hold stance.
- The Fed held interest rates at 3.50%–3.75% with a vote of 8–4, the most split since 1992.
- Powell warned that near-term inflation expectations are rising and will remain on the Board after May 15.
- The market increased the probability of an April 2027 rate hike to around 55% (Reuters).
- Q1 GDP and March PCE data will be the main triggers for the dollar's next move. (asd)
Source: Newsmaker.id
