It was a busy day for the markets with key events lined up that included the UK jobs data, the U.S. Federal Reserve meeting and the RBNZ monetary policy meeting.
Data from the UK showed that the unemployment rate fell to 4.3% on the month beating estimates of an unchanged print of 4.4%. Wage growth surprised to the upside rising 2.8% on the month which beat estimates of 2.6% and accelerating from a revised 2.7% seen previously.
The Federal Reserve hiked the 30-day Fed funds rate to 1.75% as widely expected by the markets. The Fed stuck to its baseline scenario of three rate hikes this year while upgrading its economic assessment. However, the hawkish statement was offset by a dovish press conference chaired by the new Fed Governor Jerome Powell.
The U.S. dollar fell sharply on the day with the biggest gains coming from commodities such as WTI crude oil and gold.
The RBNZ’s meeting was clearly overshadowed by the FOMC meeting. The RBNZ held the overnight cash rate unchanged at 1.75%. The monetary policy statement did not deviate from the previous monetary policy meeting which saw the NZD playing more to the Fed’s narrative than the RBNZ.
Looking ahead, focus turns to the UK as the Bank of England will be holding its monetary policy meeting today. Based on the recent dip in inflation and a pickup in wage growth, expectations ride high for the next BoE rate hike in May. With the recent tides of uncertainty from Brexit abating due to the transitory deal, the Bank of England is expected to push forward with the next rate hike.
The UK retail sales report will be coming up ahead of the BoE meeting. Economists forecast that retail sales increased 0.4% on the month, accelerating from 0.1% previously.
In the Eurozone, flash manufacturing and services PMI data for March will be released.
EUR/USD intra-day analysis
EUR/USD 4 Hour Chart
EUR/USD (1.2362):The euro currency reversed the declines as price was seen pushing higher on the day. The euro gained 0.77% on the day but price action was confined to Wednesday’s range. The bounce in the common currency sent the euro to trade back at the 1.2363 level of resistance which also coincides with a medium term trend line. A reversal at this level is quite likely but overall, the EUR/USD is expected to maintain a sideways range within the 1.2363 and 1.2180 levels of resistance and support.
GBP/USD intra-day analysis
GBP/USD 4 Hour Chart
GBP/USD (1.4158):The British pound posted strong gains with early trading today sending the currency pair to a fresh two month high at 1.4170. The gains came amid a better than expected jobs report which saw wages finally catching up as inflation cooled. The GBP/USD breached the trend line which served as resistance and could be seen pushing higher ahead of the Bank of England meeting. The BoE is expected to give a hawkish forward guidance a today’s meeting with the markets now pricing in the next BoE rate hike in the month of May. A near term dips could be seen supported by the trend line which could now act as support.
XAU/USD intra-day analysis
XAU/USD 4 Hour Chart
XAU/USD (1329.90):Gold prices broke out to the upside with price closing above the 1328 handle. The near term declines could be seen supported with a retest of 1328 level. As long as this level holds, gold prices could be seen pushing higher, potentially targeting the 1357 level as the next upside target. To the downside, in the event that 1328 fails to hold as support, we expect gold prices to settle back into the range trading within the 1328 and 1307 levels in the near term.