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GBP/USD continues to move higher this week. In North American trade, GBP/USD is trading at 1.3070, up 0.28% on the day. On the release front, British BRC Shop Price Index slowed to 0.4% in April, after a strong gain of 0.9% in the March release. British manufacturing PMI dropped to 53.2, just above the estimate of 53.1. points. Net Lending to Individuals improved to GBP 4.7 billion, above the estimate of GBP 4.5 billion. In the U.S., ADP nonfarm payrolls sparkled with a gain of 275 thousand, crushing the forecast of 181 thousand. ISM Manufacturing PMI is expected to drop to 55.0 points. The spotlight will be on the Federal Reserve, which releases its rate statement. On Thursday, the U.K. releases Construction PMI and the Bank of England will set the benchmark rate. In the U.S., the highlight is unemployment claims.

The Federal Reserve is expected to stay on the sidelines and maintain rates at a range between 2.25-2.50 percent. Investors will be focused on the rate statement, looking for clues regarding the next rate move. The Federal Reserve has said it expects to hold interest rate levels for the rest of the year, and the most recent inflation numbers will reinforce that stance, as the Fed target of 2.0% remains elusive. The Core PCE Price Index, which is the Federal Reserve’s preferred gauge for inflation, came in at 0.0% in March and 0.1% in February (the two events were released on Tuesday due to the government shutdown earlier this year). On an annualized basis, the indicator gained 1.6%, just shy of the estimate of 1.7%. GDP and consumer spending are looking bright, but nonetheless there is no danger of the economy overheating, so the Fed can afford to leave rates at the current level for the near future.

The pound has jumped 1.3% this week and GBP/USD is at its highest level since April 16. Investors are hoping that the BoE rate decision will not rain on the cable party. The bank holds a policy meeting on Thursday, and is expected to maintain rates at 0.75% for a seventh successive month. However, a dovish policy summary could weigh on investor sentiment and push the pound lower. Recent British numbers have been lukewarm, and Brexit will continue to weigh on the pound, even with the extension until October. Consumers remain pessimistic about the economic outlook and uncertainty over Brexit, and this gloomy mood has also affected consumer spending.

US ADP private employment grew strongly by 275k in April, well above expectation of 181k. Looking at the details, jobs in goods-producing sector rose 52k. Jobs in service-providing sector rose 223k.

"April posted an uptick in growth after the first quarter appeared to signal a moderation following a strong 2018," said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.  "The bulk of the overall growth is with service providers, adding the strongest gain in more than two years."

Mark Zandi, chief economist of Moody's Analytics, said, "The job market is holding firm, as businesses work hard to fill open positions. The economic soft patch at the start of the year has not materially impacted hiring.  April's job gains overstate the economy's strength, but they make the case that expansion continues on."

Full release here.

ECB Vice-President Luis de Guindos reiterated the central bank's accommodative stance in an event in London today. He said "the low interest rate environment is with us for the foreseeable future and is caused in large part by durable structural factors". He added, "even once monetary policy normalizes, interest rates are likely to remain below levels that were common in previous decades."

On Brexit, he said "I hope we will be able to take advantage of the new period of time that British government, parliament have at its disposable to reach an orderly Brexit. On Italy, he said "the main recommendation is to pursue reforms that improve the effectiveness of the economy."

European Commission Vice-President Jyrki Katainen complained that the prospects of British candidates getting into European Parliament just months ahead of Brexit creates a "messy" situation. He said "the UK has been given a deadline (to leave the EU) which is later in the autumn but the Commission president might be elected before that ... It looks very messy at the moment."

He added: "We have to make sure all MEPs have the same rights and responsibilities because we cannot be in a situation where some MEPs have a partial mandate ... But a temporary majority may cause lots of questions and troubles."

US Treasury Secretary Steven Mnuchin said he has concluded "productive meetings" with Chinese Vice Premier Liu He in Beijing. And, the discussions will continue in Washington next week. But there is so far no details regarding any progress made. Trade Representative Robert Lighthizer is quiet as usual on the topic.

https://twitter.com/stevenmnuchin1/status/1123494606656692226

Earlier, China Banking and Insurance Regulatory Commission said it will further open up the banking an insurance sectors. And it plans to issue 12 new measures soon. The measures include dropping the USD 10B asset requirements for foreign companies to set up a legal entity in the country. The USD 20B asset requirements for foreign banks to set up a branch will also be removed. Approval procedures for foreign banks to conduct Yuan businesses will be removed.

The Aussie dollar holds in quite mode ahead of Fed's decision today, after Tuesday's long-legged bearish daily candle signaled that three-day recovery from 0.6982 low might be running out of steam.

Recovery action show hesitation on approach to pivotal barriers at 0.7071/76 (Fibo 38.2% of 0.7205/0.6988 / falling 10SMA) and look for fresh direction signals.

North-heading momentum and stochastic are supportive, however, overall picture is still bearish and positive signal on close above 0.7071/76 pivots is needed to sideline bears spark further recovery.

Dovish shift in Fed's statement would boost Aussie for break through 10SMA and attack at key 0.7104/20 resistance zone (cluster of daily MA's / Fibo 61.8% of 0.7205/0.6988).

On the other side, hawkish stance from the Fed would boost the greenback and risk fresh weakness of Australian dollar, with return and close below 0.7030 support to generate initial signal of an end of recovery phase.

Res: 0.7061, 0.7071, 0.7076, 0.7104
Sup: 0.7030, 0.7000, 0.6988, 0.6931

EUR/USD continues to climb this week, as the pair has gained close to 1.0 percent. Currently, the pair is trading at 1.1236, up 0.18%. The pair is currently at its highest level since April 23. German banks are closed for the May Day holiday, so the pair is unlikely to show much movement on Wednesday. In economic news, there are no German or eurozone events. In the U.S., all eyes are on the Federal Reserve, which releases its rate statement. The U.S. will release ADP nonfarm payrolls, which is expected to jump to 181 thousand, after a weak reading of 129 thousand in the previous release. As well, the ISM Manufacturing PMI is expected to drop to 55.0 points. On Thursday, Germany releases manufacturing PMI and retail sales, while the U.S. posts unemployment claims.

Will the Federal Reserve rain on the euro party? Rate-makers are expected to sit on the sidelines and keep rates at a range between 2.25-2.50 percent. Investors will be focused on the rate statement, looking for clues regarding the next rate move. The Federal Reserve has said it expects to hold interest rate levels for the rest of the year, and the most recent inflation numbers will reinforce that stance, as the Fed target of 2.0% remains elusive. The Core PCE Price Index, which is the Federal Reserve’s preferred gauge for inflation, came in at 0.0% in March and 0.1% in February (the two events were released on Tuesday due to the government shutdown earlier this year). On an annualized basis, the indicator gained 1.6%, just shy of the estimate of 1.7%. GDP and consumer spending are looking bright, but nonetheless there is no danger of the economy overheating, so the Fed can afford to leave rates at the current level for the near future.

The upcoming FOMC announcement is in the focus of markets on Wednesday, having the maximum potential impact. US GDP showed an acceleration of growth to 3.2% but mainly due to the accumulation of stocks.

A trade deal between China and the United States has yet to be finished. The housing market is clearly stumbling on the road to growth. All the above are arguments in favor of maintaining a pause in monetary policy, which is the most anticipated market scenario. In the case of the implementation of less likely scenarios, we can see a sharper reaction.

The second option involves further rhetoric softening. The softness of the Fed helped US indices to add more than 20% since the end of last year, and could spur further growth. At the same time, it will be bad news for the dollar, which last week rose to 2-year highs.

It is unlikely but it cannot be completely ruled out that the Fed will try to cool the markets, noting that the US economy maintains healthy growth rates and that further rate hikes should be considered in the coming months. In this case, the stock markets risk getting severe hit, and the dollar can sharply turn to growth.

Speaking about stocks exchanges, strong reporting helped key US indices to go back to growth and update historic highs on the S&P 500 and Nasdaq. Data on a production activity and the labor market from ADP can affect this trend. The most dangerous is a sudden increase in the alertness of market participants since the initial desire to take profits risks turning into a serious correction.

Speaking about stocks exchanges, strong reporting helped key US indices to go back to growth and update historic highs on the S&P 500 and Nasdaq. Data on a production activity and the labor market from ADP can affect this trend. The most dangerous is a sudden increase in the alertness of market participants since the initial desire to take profits risks turning into a serious correction.

Oil prices dipped on Wednesday after a report showed a rise in available U.S. crude inventories, but the market remained tense amid an intensifying political crisis in Venezuela, tightening U.S. sanctions on Iran and continuing OPEC supply cuts.

Spot Brent crude futures, the international benchmark for oil prices, were at $71.65 per barrel at 0143 GMT, down 41 cents, or 0.6 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were down 51 cents, or 0.8 percent, at $63.49 per barrel.

U.S. crude stocks rose by 6.8 million barrels to 466.4 million barrels in the week to April 26, industry group the American Petroleum Institute (API) said on Tuesday, implying a rise in U.S. crude supply.

However, focus was shifting to the crisis in major oil producer Venezuela, where there appears to be a standoff between incumbent President Nicolas Maduro and opposition leader Juan Guaido. Many observers fear this could lead to large-scale violence, as well as disruptions to crude supply.

Crude markets have tightened this year due to supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and beefed up U.S. sanctions on Iran’s oil exports.

Washington re-imposed sanctions on Tehran in November last year, but initially allowed its major buyers to import limited crude volumes for another six months.

That period expires on Wednesday, and Washington has said it will not extend any sanction exemptions as it aims to drive down Iranian crude exports to zero.

Despite this, some analysts say global oil markets are amply supplied.

Yesterday, the EUR/USD exchange rate reached the psychological level at 1.1220. During today's morning, the rate was trading near the monthly PP at 1.1217.

The currency pair could use support of the given monthly PP and maintain its growth. However, the pair has to surpass the weekly R1 at the 1.1239. If the given resistance does not hold, the pair could reach the psychological level at 1.1260. Otherwise, the pair could trade sideways.

From technical perspective, it is unlikely, that the rate could decline due to the support cluster formed by a combination of the 55-, 100– and 200-hour SMAs, as well the Fibo 38.20% and the weekly PP in the 1.1170/1.1200 range.