EUR/USD climbed today with the help of abysmal US GDP report that showed that the US economic growth almost halted in the first quarter of this year. The currency pair trimmed its gains after the Federal Open Market Committee released its policy statement that was relatively optimistic.
US GDP growth was a meager 0.2% in Q1 2015, according to the advance estimate, versus the forecast change of 1.0% and the previous quarter’s 2.2%. (Event A on the chart.)
Pending home sales rose 1.1% in March, matching forecasts exactly. The February’s reading was revised positively from 3.1% to 3.6%. (Event B on the chart.)
Crude oil inventories increased by 1.9 million barrels last week to a new record. Total motor gasoline inventories increased by 1.7 million barrels and are above the upper limit of the average range. (Event C on the chart.)
FOMC released its policy statement today. (Event D on the chart.) While the Committee acknowledged that “economic growth slowed during the winter months,” it also stated that this was partly a result of “transitory factors.” Policy makers were relatively optimistic saying that they continue “to expect that, with appropriate policy accommodation, economic activity will expand at a moderate pace.” As for timing of an interest rate hike, the statement said:
The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.
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