The Dollar continued its march against the majors as the market continues to speculate whether or not the terminology “patient” will be removed from the FOMC statement on Wednesday. EUR/USD dropped to its lowest level since March 2003 as the pressure continues to mount on the troubled region. GBP/EUR hit its highest level since November 2007.
The week ahead will be dominated by the FOMC meeting today. Economic data, in particular the labour data has been impressive. Will this be enough for the FOMC to change the language and tone of the statement and loosely signpost the next move in interest rates? If the FOMC drops the “patient” term speculators will start debating whether or not June is a viable option to be raising rates which in turn could result in further Dollar strength.
Meanwhile, this side of the pond there will be particular attention on the unemployment data and the annual budget.UK labour data has been fairly robust of late and could provide the economy with a further boost running into the General Election. Whilst Sterling is weak against the Dollar, it is strong against a number of other currencies as an interest rate hike is still in discussion for the end of 2015 or early 2016.