On April 29, ahead of the Federal Reserve's April FOMC meeting, renowned financial journalist Nick Timiraos, often referred to as the "New Fed News Service," published an article stating: Two years ago, amid stable U.S. economic performance and steadily declining inflation, Fed Chair Powell humorously dismissed concerns about "stagflation," saying, "Honestly, I see neither 'stag' nor 'flation'." Today, an energy shock triggered by real conflict has brought this risk back to the forefront—at a time when U.S. inflation has never truly returned to the Fed's 2% target. The historical shadow of 1970s-style stagflation no longer seems as distant as it did two years ago. For FOMC committee members, Timiraos noted, the bigger question is whether the formal statement should be revised to signal that interest rate cuts are essentially off the table. History shows that such language adjustments can sometimes carry as much weight as the interest rate decisions themselves.
Separately, Bank of Japan Governor Kazuo Ueda stated at a press conference that price upside risks outweigh economic downside risks for Japan in the current fiscal year. He noted that corporate price-setting behavior has become more aggressive than before, raising the risk of significant upward revisions to inflation expectations. The trend of gradual increases in wages and prices is expected to continue, while financial conditions remain generally accommodative. Ueda emphasized the need to avoid falling behind the curve in the fight against inflation and indicated that appropriate policy decisions will be made starting from the next meeting. He stressed that if the economy does not slow significantly, a rate hike is a realistic possibility, and the central bank remains in the process of gradually raising interest rates toward neutral levels. At the same time, due to uncertainties in the Middle East, Ueda said the likelihood of the central bank’s outlook being realized has diminished, and the BOJ will continue to monitor whether this probability can rebound.
Key data to watch today include the Eurozone’s April Economic Sentiment Indicator, the final reading of the Eurozone’s April Consumer Confidence Index, Germany’s preliminary April CPI annual rate, and the U.S. March Durable Goods Orders monthly figure. Additionally, the Bank of Canada’s interest rate decision and Monetary Policy Report in the evening, as well as the Federal Reserve’s interest rate decision early the next day, warrant close attention.
Gold/USD Gold declined in a volatile session yesterday, hitting a four-week low, with the spot price currently trading around 4598. Apart from expectations that the Fed’s policy decision may signal a hawkish stance, which weighed on gold, fading optimism over Middle East negotiations also contributed to the downward pressure. Furthermore, strong U.S. economic data released during the session added to the selling pressure. Today, resistance is seen near 4650, while support lies around 4550.
USD/JPY The USD/JPY pair traded sideways yesterday, closing slightly higher, with the current exchange rate around 159.70. A stronger U.S. dollar, supported by renewed safe-haven demand and expectations of a hawkish signal from the Fed’s policy decision, was the main factor behind the pair’s gains. However, concerns over possible intervention by Japanese authorities and the Bank of Japan’s decision to keep rates steady while signaling a relatively hawkish stance—along with rising expectations for a June rate hike—limited the pair’s upside. Resistance is expected near 160.50 today, with support around 159.00.
USD/CAD The USD/CAD pair moved higher yesterday, closing slightly up, with the current exchange rate around 1.3690. Short-covering provided some support, while a rebound in the U.S. dollar index—bolstered by solid economic data and renewed safe-haven demand—also contributed to the pair’s strength. However, continued gains in crude oil prices capped the pair’s advance. Resistance is seen near 1.3800 today, while support lies around 1.3600.