Dollar's selloff accelerated overnight after disappointing Q1 GDP and the greenback stayed weak after FOMC statement. Fed kept policies unchanged as widely expected. Notably, in the statement, the reference that 'an increase in the target federal funds rate remains unlikely' disappeared without being replaced by other languages. This change signaled that a rate hike in June cannot be ruled out. However, we retain the view that September would be a better timing although some hawk, such as Richmond Fed President Jeffrey Lacker, a voting member in 2015, would probably argue for tightening in the next meeting. The Fed acknowledged the softness of recent economic data and attributed it to 'transitory factors'. Yet, the central bank appeared confident that consumer spending would rebound in the coming months as 'households’ real incomes rose strongly, partly reflecting earlier declines in energy prices, and consumer sentiment remains high'. More in FOMC Statement Signals June A 'Live' Meeting.
New Zealand dollar stumbled after RBNZ April statement. While the OCR stayed unchanged at 3.5% as widely expected, the statement was interpreted to be more dovish than the previous one. Indeed, Assistant Governor McDermott last week's comment has already indicated the RBNZ's easing bias and this meeting statement aimed at formalizing his idea. We expect, assuming the absence of exceptionally weak economic data, the central bank would leave the monetary policy unchanged. n the accompanying statement, it's noted that 'the Bank expects to keep monetary policy stimulatory, and is not currently considering any increase in interest rates….The timing of future adjustments in the OCR will depend on how inflationary pressures evolve in both the non-traded and traded sectors. It would be appropriate to lower the OCR if demand weakens, and wage and price-setting outcomes settle at levels lower than is consistent with the inflation target'. The last sentence sent a dovish note, when compared with March statement which suggested that the RBNZ's 'central projection is consistent with a period of stability in the OCR. However, future interest rate adjustments, either up or down, will depend on the emerging flow of economic data'. More in RBNZ Signaled Easing Bias.
On the data front, New Zealand building permit rose 11.0% mom in March. Australian import price dropped -0.2% qoq in Q1. Japan industrial production dropped -0.3% mom in March. UK Gfk consumer sentiment was unchanged at 4 in April. Looking ahead, Swiss KOF, German unemployment, Eurozone unemployment and CPI will be the main feature in European session. Canada GDP will be closely watched later in the day. US will release jobless claims,personal income and spending and Chicago PMI