Fed Holds Rates Steady

The US Dollar experienced a broad sell-off across the board as the Federal Reserve opted to stand firm on policy at its meeting's conclusion yesterday. Speaking at the press conference, Fed Chairwoman, Janet Yellen noted that recent global developments had put downward pressure on inflation. She further remarked that the US Dollar appreciation was putting a net drag on the exports sector while maintaining that the effects of lower crude oil prices were still 'transitory'. The Fed however believed that a rate hike this year was imminent. The staff economic projections showed that the Fed funds rate was revised lower by 0.25%, showing that there is a possibility of the Fed funds target range to be between 0.25 - 0.50% by end of 2015. EURUSD rallied by 1.24% yesterday after the FOMC event to close at 1.1428 before easing back lower in today’s early trading session.

The monthly consumer inflation numbers from Canada will be released today at 13:30 GMT and is the only major macroecononmic  event during the North American trading session today. Expectations call for the monthly core CPI to have risen 0.20%, up from 0.00% reading last month while headline CPI is expected to stay flat at 0.00%, down from 0.10% last month.  The consumer inflation reading is the first key data point since the Bank of Canada left rates unchanged at 0.50% during the last monetary policy meeting a few weeks ago. The Central Bank had noted that inflation remains in line with the BoC's expectations of 2.00% for core annualized CPI. The Canadian dollar was volatile yesterday as USDCAD briefly touched the lows to 1.3075 before easing back to the upside. For the sassion, USDCAD closed in positive territory with modest gains of 0.08%.