Two heavy weight events are scheduled for the US today. Firstly. Q1 GDP is expected to show -4.0% annualized contraction. That would be the steepest contraction since the Great Recession in 2009. Consumer spending has definitely suffered a big hit from the coronavirus lockdowns. Some focuses would be on business investments. Optimism was lifted just for a brief while by US-China trade agreement phase one, but then nose-dived on the pandemic.
Fed is generally expected to keep monetary policies unchanged today. There will be no formal economic projections until June, which is agreeable as everything ties to how the coronavirus pandemic is contained. Nevertheless, Fed chair Jerome Powell could still offer a glimpse of what he expected in the second half, and he view on the shape of the recovery. Guidance on interest rates would be something to watch too. Powell has ruled out negative rates for now and we’ll see if he sticks to the same position.
Suggested readings:
- FOMC to Highlight Weakness in Economy and Reinforce Dovish Stance in April Meeting
- Fed Meeting: Taking A Breather
While Dollar is performing rather poorly this week, the development in Dollar index isn’t that bad. That’s primarily due to indecisiveness in Euro, though. Technically, we’re seeing price actions from 102.99 as a corrective pattern, with the sideway pattern from 98.27 as the second leg. Firm break of 55 day EMA will confirm the start of the third leg towards 98.27 support. But in that case, we’d expect strong support from 61.8% retracement of 94.65 to 102.99 at 97.83 to contain downside and bring rebound.
