Calm in Currency Markets Ahead of Fedâs Fourth Straight Hold
| Action Insight Mid-Day Report 5-7-25 |
Calm in Currency Markets Ahead of Fed’s Fourth Straight Hold |
The forex markets are treading water ahead of today’s FOMC decision. While the announcement typically acts as a volatility trigger, the lack of suspense surrounding this meeting could mean muted price action even after Chair Jerome Powell’s press conference. Markets are pricing in a near-certainty, 99% probability, that Fed will hold the policy rate steady at 4.25–4.50% for a fourth straight meeting, leaving little room for surprise. Adding to the quiet is the absence of updated economic projections and dot plot guidance, which are only due at the June meeting. Last week's stronger-than-expected non-farm payrolls cooled expectations for near-term easing, with the chance of a June rate cut falling to around 30%. Traders will be closely watching Powell’s tone for any nuanced shift, particularly regarding the timing of the next rate cut. However, officials are likely to maintain their cautious, data-dependent posture given persistent economic uncertainty, especially around the evolving US tariff policies. Indeed, Powell is expected to reiterate that the Fed is not in a hurry to adjust rates. The ongoing tariff truce and upcoming negotiations—such as this weekend’s Geneva meeting between U.S. and Chinese trade officials—introduce substantial geopolitical risks that could influence inflation, growth, and financial conditions. With so many moving parts, Fed is unlikely to make any forward commitments. For now, the market still leans toward three rate cuts by year-end, which would bring the target range down to 3.50–3.75%, but policymakers are not ready to validate that path..... |
USD/CHF Mid-Day Outlook Daily Pivots: (S1) 0.8201; (P) 0.8233; (R1) 0.8254; More…. USD/CHF is still bounded in right range below 0.8333 and intraday bias remains neutral for the moment. On the upside, above 0.8333 will resume the rebound from 0.8038. However, upside should be limited by 38.2% retracement of 0.9200 to 0.8038 at 0.8482. On the downside, below 0.8196 minor support will bring retest of 0.8038. Firm break there will resume larger down trend. | |
| GMT | Ccy | Events | Actual | Forecast | Previous | Revised |
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| 22:45 | NZD | Employment Change Q1 | 0.10% | 0.10% | -0.10% | -0.20% | | 22:45 | NZD | Unemployment Rate Q1 | 5.10% | 5.30% | 5.10% | | 22:45 | NZD | Labour Cost Index Q/Q Q1 | 0.40% | 0.50% | 0.60% | | 00:30 | JPY | Services PMI Apr F | 52.4 | 52.2 | 50 | | 06:00 | EUR | Germany Factory Orders M/M Mar | 3.60% | 1.10% | 0.00% | | 07:00 | CHF | Foreign Currency Reserves (CHF) Apr | 703B | 726B | | 08:30 | GBP | Construction PMI Apr | 46.6 | 46 | 46.4 | | 09:00 | EUR | Eurozone Retail Sales M/M Mar | -0.10% | -0.10% | 0.30% | 0.20% | | 14:30 | USD | Crude Oil Inventories | -1.7M | -2.7M | | 18:00 | USD | Fed Interest Rate Decision | 4.50% | 4.50% | | 18:30 | USD | FOMC Press Conference |
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