Eyes turn to FOMC meeting tonight

Daily Currency Update

Yesterday the US CPI was released which came in as expected at 0.1% month-on-month and slightly less than expected year-on-year at 4.0% vs. 4.1% forecast and 4.9% prior. Many believe that this signals a likely halt or at least pause to the rate hiking cycle from the Federal Reserve. Analysts from JP Morgan expect the Fed to leave the federal funds rate unchanged and look to the post-meeting statement for an indication on potential future hikes.

The US Dollar Index, DXY, is hanging near multi-week lows as markets await the decision from the Fed tonight. The DXY is trading around the 103 – 103.4 mark over the last couple of days.

GBPUSD has managed to defend its position above 1.26 this morning after UK GDP data was released at 0.2% month-on-month as expected in April. The pair was largely unaffected by the release of manufacturing data at -0.3% month-on-month versus an expected -0.2%.