Preparation is everything. That also applies for the Fed’s normalisation course, but no change is expected from the Fed this week. The Fed will need to start prepping the market more actively if a hike in June is a viable possibility.

We think current macro situations lead the fed to almost defer policy actions to June meeting, but manipulative statements on monetary policy outcome may keep USDJPY at stake.

Since the March meeting, the spending data have been disappointingly subdued, especially consumer spending and residential housing activity.

US GDP is now pointing to just 0.4% q/q annualised growth in Q1, which is slightly below the consensus expectation of 0.6%. To some extent the softness reflects a quirky pattern that has been evident in recent years.

Specifically, the outturn in Q1 GDP is significantly below other quarters. Thus, the weakness in Q1 may be exaggerated. The strength in hiring suggests activity remains solid.

“It makes sense for the Federal Reserve to delay another interest rate increase until inflation picks up”, said Philadelphia Fed President Patrick Harker in recent times.

Given the behaviour of oil prices, inflation is likely to be “quite low....probably even negative” in Q1.

Elsewhere, volatile financial markets will cause Federal Reseve policymakers to delay their next interest rate increase until spring and reduce the number of hikes next year to no more than two.

The US also has pending home sales and the March goods trade balance. Both have been mixed of late.

Hence, Fed’s officials think that it would be prudent to wait until the above highlighted areas become stronger before central bank undertakes a second rate hike.

DXY that measures the greenback’s strength against a trade-weighted basket of six major currencies among G10 space has decreased to 94.31.

Overnight, the dollar remained broadly lower against the other majors as well on Tuesday, as the release of disappointing U.S. economic reports hampered the demand for the greenback and as long term investors stood vigilant ahead of the Federal Reserve’s policy statement.