US Fed Holds Rates, Powell Cautious on Rate Cuts

🗓️ May 1 – In the latest FOMC meeting, the Federal Reserve maintained its target interest rate range at 5.25% to 5.50%. Starting June, the pace of quantitative tightening will slow, aligning with market expectations. Fed Chair Jerome Powell emphasized that the timeline to gain confidence in cutting interest rates will be longer than initially thought, citing rising short-term inflation expectations. Despite this, a rate hike seems unlikely in the near term. Powell reiterated the Fed’s commitment to its dual mandate, noting significant progress in achieving full employment and stable prices. He highlighted the robust expansion of the US economy, though inflation remains above the 2% target, with recent data exceeding expectations.

AUD Strengthens Amid BoJ Intervention

The Australian dollar (AUD) saw a rise of 0.51% to close at 0.6566 against the USD, briefly touching 0.6586, following news of the Bank of Japan’s market intervention which softened the USD. Current market forecasts give a 50% chance of another rate hike by the Reserve Bank of Australia before September. The AUD’s upward trajectory is supported by subtle shifts in interest rate directions and technical indicators suggest further potential gains, with next resistance seen between 0.6616-0.6645. Watch for support around the 0.65 level amid significant US events this week that may influence the AUD.