The dollar was under much pressure following yesterday's disappointing GDP figure, and stayed weak after FOMC announced further tapering as widely expected. The dollar index breached the 79.50 handle overnight, but is now taking a breath at the time of writing. In the currency markets, the Canadian dollar remains the strong currency this week, closely followed by Sterling, which gathered some momentum yesterday. The yen is the weakest currency, but it's generally stuck in range against other majors. Many European markets are on holiday today, but there are Some important economic data scheduled to be released from UK and US.
The April FOMC meeting continued few surprises with policymakers tapering further by additional US $10B to US$45B ($20B in agency MBS and $25B in Treasuries). The decision suggests that the central bank remains on track to complete tapering in October. The central bank also acknowledged that the GDP report in 1Q14 was below expectations but noted that growth had accelerated afterwards. Minneapolis Fed President Kocherlakota did not dissent the forward guidance this time as he indicated previously. Meanwhile, the statement also removed the reference, which appeared in March that 'the change in the Committee's guidance does not indicate any change in the Committee's policy intentions as set forth in its recent statements'. More in FOMC Tapered Further, Acknowledged Faster Growth After Disappointing 1Q14 GDP Report.
On the data front, China manufacturing PMI rose to 50.4 in April but missed expectation of 50.5. Australia's import price index rose 3.2% qoq in Q1 versus expectation of 1.8% qoq. Looking ahead, the UK's manufacturing PMI is expected to rise to 55.4 in April. Mortgage approvals are expected to rise to 72.0k in April. M4 money supply will also be released. Any upside surprise in PMI or mortgage approvals could propel Sterling higher against the greenback. From the US, challenger job cuts, initial jobless claims, personal income and spending, and construction spending would be released. But, the main focus will be on ISM manufacturing which is expected to rise to 54.2 in April.