Global Forex Market
THE dollar witnessed a sell-off mid-week after the Fed turned rather dovish during its FOMC meeting — tweaking its dot plot projection to zero hike for 2019 from two hikes back in December 2018, signalling the end of quantitative tightening (QT).
The Fed also altered its official projection for major economic data in 2019 — GDP slashed to 2.1% (prevous: 2.3%); PCE (Fed’s preferred inflation gauge) revised downwardly to 1.8% from 1.9%; and unemployment rate revised to 3.7% from the earlier projection of 3.5%. However, the dollar pared losses by the end of the week owing to Brexit-related noises as well as the upbeat economic figures released this week such as initial jobless claims which edged down to 221,000 from 230,000 a week earlier; and the Philadelphia Fed manufacturing index in March rising to 13.7 from -4.1 the previous month (consensus: +4.5).
On a separate note, US-China trade tensions re-emerged after President Trump suggested that trade tariffs would continue for a “substantial period” to ensure that China kept its terms of the agreement. By the end of the week, the dollar fell 0.03% to 96.5.
For the commodity market, Brent crude oil rose 0.47% to US$67.70/bbl, posting a year-to-date (YTD) high as Opec reaffirmed its commitment on the supply cut for at least 1H2019 with the next decisive meeting scheduled on June 2019 which will determine the production target for rest of the year. Furthermore, the unexpected drawdown from the EIA also underpinned the price. The US inventory was lower by 9.59mil barrels for the week ended March 15, beating the market expectation of a 0.07mil increase.
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