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FOMC Hiked Interest Rates and BOE Meeting Today

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USD

The Federal Open Market Committee, that is responsible for interest rate decision and money supply, hiked interest rate bound from 1.25%-1.50% to 1.50%-1.75%, which is the highest interest rate in United States since last 10 years. Fed Chairman, Jerome Powell, defended these high interest rates by saying that the economy is in much better shape than it was 10 years ago. The statement of the FOMC meeting stated that the economic outlook has strengthened in recent months, labor market is strong and expected inflation to move up in the coming months. The market was already pricing in a 99% chance that the FOMC will hike interest rates, and traders were waiting for hawkish comments from the chairman so the USD gains some strength. But during his press conference, the chairman didn’t emphasize the strong economy that was mentioned in the statement and he didn’t rule out how many times the fed will hike rates this year by saying that there is no direct signal for rate move in the dot plot. The dollar index is trading at lows of 89.40.

EUR

EUR/USD is back in positive territory for the week trading now at highs of 1.2380. The Euro spiked after the FOMC interest rate decision and press conference by the chairman. Today we have couple of data coming out from Eurozone such as Manufacturing and services Pmi and the IFO business climate from Germany.

GBP

Yesterday, GBPUSD erased the losses that the pair faced after the CPI numbers, after a rise in the average earnings index to a level of 2.8% where market expected only 2.6%. GBP appreciated also after the FOMC, awaiting today’s retail sales report and the Bank of England interest rate and asset purchase decision. Economist don’t expect any change in interest rate at today’s meeting but looking forward to grasp hawkish comments from the MPC. Money market is pricing in a 90% chance of a rate hike later in May meeting. GBPUSD is trading at highs of 1.4170 which is the highest since early February.

Gold

Gold bounced for the third time from the major support zone of $1300-$1310 and gained ground from the weakening United States Dollar. Gold traded highs of $1337, where price found some selling pressure taking it back to around $1330 level. Next major resistance for gold is noticed at $1341.

Oil

Oil rallied to highest level since early Febaruary after the report by the Energy Information Adminstration showed U.S Crude oil inventories fell by 2.62Million barrels last week, compared to the gain of 3.25Million that was estimated by analysts. Crude traded back above the $65 level in NewYork, close to breaking to the highest level in three years.

The most important economic events:

  • German Business Expectations (Mar): (GMT 09:00) – Important – Forecast (104.4) – Previous (105.4).
  • German Ifo Business Climate Index (Mar): (GMT 09:00) – Important – Forecast (114.7) – Previous (115.4).
  • GBP Bank of England Bank Rate (MAR 22): (GMT 12:00) – Important – Forecast (0.50%) – Previous (0.50%).
  • GBP BOE Asset Purchase Target (MAR): (GMT 12:00) – Important – Forecast (435b) – Previous (435b).
  • JPY National Consumer Price Index (YoY) (FEB): (MAR): (GMT 12:00) – Important – Forecast (1.5%) – Previous (1.4%).

Disclaimer
The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.

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