Key Headlines

•            Powell suggests not enough evidence to consider rate hike at present

•            Volatility on JPY on further intervention speculation

Recap

Mixed numbers stateside over the course of the afternoon, with ADP payrolls coming in higher than expected, but then both the JOLTS job openings and ISM manufacturing came in lower than anticipated. The net effect on USD was minimal going into the evening's Fed meeting. Market sentiment was lower across the board, dragging GBP lower across the board as well.

The high hawkish bar was not met by Fed Chair Powell last night, after he commented that he feels monetary policy is restrictive enough at present and that “persuasive evidence” will be needed for the Fed to hike interest rates. The lack of a hawkish surprise failed to give a fresh catalyst for market to buy into USD as a result, with focus now likely to fall on Friday’s job numbers.

There was volatility on JPY pairs overnight on speculation that authorities in Japan intervened in FX markets for the second time this week. Similar to Monday we saw broad USD selling across the board, although limited to key support levels.

Today’s Overview

Both GBPUSD and EURUSD are trading back up to key resistance levels on the back of the Fed meeting, as well as speculation on additional intervention talks in Japan. However, there doesn’t appear to be enough from the Fed meeting to spur on additional USD selling in the markets, and going into tomorrow's job numbers we would expect consolidation on USD pairs today. Worth noting Powell's comments on ‘persuasive evidence’ needed for a rate hike, and thus puts focus on future data points to determine whether markets start pricing in a rate hike by the Fed this year. Friday jobs numbers and CPI numbers on the 15th May will be likely the next key dates for USD.

On the geopolitical front, reports suggest that the US and Saudi Arabia are close to a new defence pact that could lay out a path to diplomatic ties with Israel, should Tel Aviv bring the war in Gaza to an end.

Equals Market Analysis– 2^nd May 2024

Today’s Rates

Today's Interbank Rates at 09:30 am against GBP movement.

GBP>EUR – 1.1691

GBP>USD – 1.2516

EUR>USD – 1.0702

GBP>CAD – 1.7168

GBP>AUD – 1.9146

GBP>SEK – 13.676

GBP>AED – 4.5965

GBP>HKD – 9.7830

GBP>ZAR – 23.251

GBP>CHF – 1.1418

GBP>PLN – 5.0663

Speeches

•          None today.

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