Yesterday the Fed upwardly revised its GDP growth and inflation forecasts and was more optimistic on the outlook for unemployment. Despite that seven members of the FOMC saw a rate hike in 2014; it was finally Bernanke who had the last word - his comments led investors to understand that the Fed remained prepared to use any of its tools to provide support to the economy should the need arise. Suggesting that while QE3 is not round the corner it remains very much on the table.
The slipped to day's lows at 1.3173; after the FOMC's interest rate decision and quarterly forecasts were made public. Yet the euro soon took the lead against the USD after Bernanke chose to remain cautious.
For the EUR/USD our market trend remains neutral; but Elliott wave projections see an elongated flat correction to 1.3299 as long as we remain supported at 1.3146.
Late yesterday the RBNZ kept policy rates unchanged at 2.5%. The central bank of New Zealand said that if support for the NZD remains elevated the probability of future rate cuts increases. This marks a slight shift in policy were before the talk was more about postponing a rate hike; but now the possibility of a future cut is also in the cards. Despite the more dovish stance the kiwi has gained strength when compared to the euro and the USD.
From the UK yesterday GDP advanced figures for the first quarter disappointed expectations for a swing into positive; as actual figures came out at -0.2% thus putting the UK back into a technical recession; after two consecutive quarters of contraction. The slipped to lows of 1.6082 but gradually pared its losses as the USD weakened.