The US Fed Reserve kept the Fed Funds Rate at 2%-2.25% in their May FOMC meeting held yesterday. Fed Chairman Jerome Powell cited that although inflation remains below the target level of 2%, it is expected to rise in the months to come. The dollar index surged to 97.14 levels overnight against a basket of its main rivals.
The Bank of England has also left rates unchanged. Bank governor, Mark Carney, says that interest rate increases will be required after a smooth Brexit as the bank is forecasting an increase in GDP growth. The Great British Pound has been strengthening on the news and was last seen trading at 1.3040 against the dollar.
Oil prices are trading lower this morning due to a surge in US oil output. Current US inventory levels have only been matched once in the last two years. Prices continue to be supported, however, by the political crisis in Venezuela, tighter US sanctions against Iran that allow no more exemptions from May, and OPEC following through with supply cuts. WTI crude prices have hit a low of $62.30.
According to the weekly data published by the US Department of Labor, initial claims for state unemployment benefits were flat at a seasonally adjusted 230,000 for the week ended April 27; unchanged from higher levels last week, however, the trend remained consistent with tightening labour market conditions.