Risk aversion appeared to rule the day on Thursday, and carried over into overnight trading today. The latest Fed statement gave a fairly pessimistic view about the current state of the U.S. economic recovery. This appears to be the case despite the fact that the most recent American unemployment number represented a significant improvement over last week's figure. It appears that investors have now fully accepted the idea that American record low interest rates are to remain in place for the foreseeable future.
Generally speaking, when investors begin to fear the pace of the global economic recovery, they sell off their riskier assets and buy up safe-havens like the USD. Yesterday was no different, as the greenback was able to make fairly large gains on both the aussie and loonie. AUD/USD dropped some 75 overnight, before making a slight recovery in early morning trading. USD/CAD shot up almost 60 pips before leveling off. Currently the pair stands at approximately the 1.0415 level.
Today a relatively slow news day may lead to low volatility in the market place. Still, traders will want to watch out for the U.S. Final GDP figure, set to be released at 12:30 GMT, and the U.S. Revised UoM Consumer Sentiment Report at 13:55 GMT. Both reports have the potential to inject some life into the marketplace, with a result at or below expectations likely to benefit the greenback.