CAD stutters amid lower-than-expected GDP data

Key Movers

The US Dollar Index (DXY) fell 0.11% over the past 24 hours to trade near 106.185 this morning as investors wait for the Federal Reserve’s rate announcement today. The Fed is expected to leave rates unchanged during today’s meeting, but markets will be awaiting Fed Chair, Jerome Powell’s comments as well. US private sector jobs data was released yesterday showing an increase in jobs by 192,000 in April. This was below March’s increase of 208,000 jobs. Additionally, the Job Opening and Labor Turnover Survey (JOLTS) showed that the number of job openings reached 8.488 million, which was 325,000 below March’s count of 8.813 million. Both data points suggest a weaker employment picture for the US in April.

The EUR/USD pair remained stable this morning as markets wait for the Fed’s rate decision. The pair dipped to the mid-1.06 range this morning before returning to its opening level of around 1.07. With no significant data releases or European Central Bank (ECB) commentary expected out of the Eurozone today, the path for this pair will hinge on the Fed announcement.

The GBP also remained unchanged in today’s session so far, mirroring other major currencies. UK housing data showed a slightly greater-than-anticipated decline in house prices, down 0.4% in April based on Nationwide’s index. Meanwhile, the UK Manufacturing Purchasing Manager’s Index (PMI) data trended upwards at 49.1 from 48.7.

The JPY continued to be undermined by the divergent Bank of Japan and Fed policy expectations. As the Fed is expected to keep rates higher for longer, the USD will likely rise lending support to the USD/JPY pair. The main driver of the JPY weakness was the interest rate differential between Japan and U.S which is expected to remain wide for some time.