investingLive Americas FX news wrap 29 Apr: Fed Holds Rates, Split Tilts Hawkish. USD up

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• Bank of Canada’s Macklem: Under base case, changes to the policy rate likely to be minimal
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• Bank of Canada rate decision: Hold at 2.25% as expected
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• Germany April preliminary CPI +2.9% vs +3.0% y/y expected

The FOMC left rates unchanged, but the decision revealed a meaningful split beneath the surface.

The vote came in at 8–4, with Miran dissenting in favor of a rate cut, while Hammack, Kashkari, and Logan supported holding rates but opposed adding an easing bias to the statement. That group effectively pushed back against signaling near-term rate cuts—giving the decision a hawkish tilt, especially heading into the leadership transition from Jerome Powell to Kevin Warsh.

That said, the broader committee still leans dovish. Eight members supported maintaining the easing bias, meaning the path of least resistance still points toward eventual rate cuts—even if the timing remains uncertain.

As for Powell, this marked his final meeting as Fed Chair. He noted that he intends to remain at the Fed in a lower-profile role, particularly as legal challenges involving the institution continue to play out.

Key Takeaways from his press conference:

• Inflation still a problem: Core PCE seen at 3.2%, headline PCE 3.5%; near-term inflation expectations are rising, partly driven by higher energy prices
• Labor market cooling but stable: Demand has softened, job growth is slowing, but the labor market is not deteriorating sharply
• Consumer remains resilient: Spending continues to hold up despite higher prices
• Policy stance = patient:
  • No urgency to remove the easing bias
  • No support for rate hikes right now
  • Debate was “vigorous,” but the majority favored no change in guidance
  • Next 30–60 days of data will be key
• Internal divide at the Fed:
  • Some favor moving toward neutral to reflect markets
  • Others prefer waiting in case policy needs to reverse
• Bottom line on policy:
  • Fed is not in a hurry to shift direction
  • Inflation is “misbehaving,” but labor is stabilizing → keeps Fed cautious and data-dependent

Tone / Bias:

• Slightly hawkish hold → inflation concerns + no rush to ease
• But not outright hawkish → no appetite for hikes

Market implication:

• Supports higher yields / stronger USD bias near term
• Keeps volatility tied to incoming inflation and labor data

As such, yields did indeed move higher. Looking at the yield curve:

• 2 year yield 3.946%, rose 10.3 basis points
• 10 year yield 4.429%, rose 7.6 basis points
• 30 year yield 4.999%, rose 5.5 basis points

US stocks closed little changed. Both the S&P and the Nasdaq moved 0.04% on the day with the S&P down -0.04% and the Nasdaq up 0.04%. The Dow and the Russell 2000 the story was less encouraging with each falling by around -0.60^.

The USD moved higher with the USDJPY breaking to the upside and reaching a new high for the year going into the close above 160.45. The EURUSD is trading just under its 200 day MA at 1.1674 (at 1.1671).

The Bank of Canada also met today, and kept rates unchanged (concerned about employment getting wearker and inflation moving higher but then coming back off later in the year – if oil price came down. The USDCAD moved higher after the decision and away from the converged 100/200 hour MAs at 1.3666. However, the price bounced off of that level, keeping the buyers in play. If the price is to move higher from here, it needs to stay above the MAs and also extend above the high from last week at 1.3715 and the 100 day MA at 1.37295.

Oil prices was also a tailwind for yields moving higher, and the USD moving higher. It surged by 8.57% on the day as the Trump administration signaled the strategy to starve Iran by the blockaid of the Strait of Hormuz. That plan could keep the flow of ships limited for “months”.

This article was written by Greg Michalowski at investinglive.com.