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- The Federal Reserve yesterday raised its interest rate by 0.25% to 5.00% as had been widely expected but amended the language in its statement to remove the reference to “ongoing increases”, suggesting that this may be the final hike within the present cycle of tightening. Futures markets currently imply one more 25bps hike will be made. Stock markets initially rallied on the hike, but Jerome Powell sent them lower during his press conference by expressing concerns about the banking sector, and by strongly implying that the banking crisis has lowered the odds that the US economy will enjoy a soft landing. The US Dollar weakened following the release, in line with its long-term trend. The 2-Year Treasury Yield also fell firmly and is again trading below 4%.
- Major US stock market indices like the S&P 500 Index and the the NASDAQ 100 Index closed firmly lower yesterday by more than 1.5% each, but futures markets have shown a recovery during the Asian session. The Chinese Hang Seng Index is up by more than 1.5%. Shares in banking stocks still look weak.
- The price of Bitcoin still looks bullish, after it made a new 9-month high yesterday, but the resistance level at $28,846 has held so far.
- Gold has made a strong recovery since the Fed’s release yesterday, and its price is again approaching the big round number at $2,000.
- In the Forex market, the US Dollar added yesterday to its long-term decline within the prevalent bearish trend. Today, the New Zealand Dollar looks to be the strongest major currency, while the US Dollar is the weakest.
- Yesterday’s release of UK CPI (inflation) data showed an unexpected increase from 10.1% to 10.4%, instead of the anticipated decline to 9.9%. This has helped send the British Pound lower against the Euro, with the EUR/GBP currency cross advancing firmly.
- Today will bring central bank releases from the Bank of England and from the Swiss National Bank. The Bank of England is expected to hike its interest rate by 0.25%, while the Swiss National Bank is expected to hike by 0.50%.
- It is likely to be a very active day in the Forex market, due to recent high-impact policy releases, with two more to follow today.
- There will be a release of US unemployment claims data today.