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Date:
30th Apr 2021
Author:
Dalmas Ngetich, for AltumFx News Team

The USD Contracts, FED Says Policy Normalization Talks Premature

The USD contracted and traded sideways for the better part of Apr 29 after the FED kept rates constant while dismissing policy normalization talks as too premature. It was a marked continuation of what had transpired on Apr 28 when the greenback underperformed commodity currencies like the AUD and was trailing most G-7 currencies, especially the JPY.


Details: 

The U.S. economy is dependent on its central bank, keeping rates low at a critical juncture when a lot depends on monetary policy. By maintaining low rates and now tapering bond purchases, the FED reassured the investment community. Already, economic data on Apr 29 showed that the U.S. GDP for Q1 2021 accelerated. Also, President Biden—while speaking before the Senate, proposed a new spending package, a boost to the economy.


Impact on the USD: 

Bullish. The overarching concern for the FED is economic recovery and full employment. Hints of growth, as shown by Q1 2021 GDP, would serve to strengthen the greenback.


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