Dollar And Euro Firm Ahead Of FOMC

The Dollar and euro are standing firm against other major currencies as markets await today’s FOMC rate decision and press conference. At the Congress' Joint Economic Committee in May Fed Chairman Ben Bernanke signaled that the central bank "could take a step down in the next two meetings" if economic data warrants. His comments resulted in turbulent market reaction which was later watered down by other policymakers. The key economic data perused by the Fed are employment and inflation. May's employment report showed that U.S. payrolls increased 175K, up from the addition of 149K the prior month. The jobless rate climbed modestly higher to 7.6%. Inflation has remained benign. Headline CPI for May rose 0.1%, following 2 consecutive months of contraction in April and March. On an annual basis, inflation rose 1.4% from 1.1% in April. Core CPI stayed unchanged at 1.7% during the month. The Fed will only consider tapering when the number of payrolls reaches an average monthly rate of at least 175K, while core inflation stopped moderating further.
In Japan, BoJ governor Kuroda said that the central bank will "examine both upside and downside risks to the economy and prices, and make policy adjustments as needed." In a speech in Jerusalem, ECB President Draghi indicated that the central bank might take further policy action, stating that "there are numerous other measures - standard interest rate policy and non-standard measures - that we can deploy and that we will deploy if circumstances warrant…Some of those measures may have unintended consequences. This does not mean that they should not be used, but it does mean that we need to be aware of those consequences and manage them appropriately".

On the data front, the New Zealand current account deficit narrowed to NZD -0.663b in Q1. Japan trade deficit widened to JPY -0.82T in May. Australia conference board leading indicator rose 0.3% in April, while the Westpac leading indicator rose 0.6%. BoE minutes will be on focus in European session. The Swiss will release the ZEW, and Canada will release wholesale sales today.