The Federal Reserve Raise Rates: Market Update
AvaTrade | Jun 15, 2017 07:35AM ET
The Federal Reserve rose interest rates yesterday and laid out additional plans to further tighten monetary policy despite concerns over lagging inflation in the US.h3 Forex/h3 h3 USD/h3
The dollar ended flat on Wednesday, reclaiming early losses after the Fed’s interest rate decision. The greenback has risen this morning. Thanks to the increase in interest rates money was funnelled back into the dollar as it will now be able to yield more for investors.
h3 /h3 h3 EUR/h3Amid the dimming political risk in the Europe, the euro should rise in the next year. However, this morning investors are favouring the dollar which is pushing the euro 0.24% lower.
h3 /h3 h3 EURUSD/h3There could be bearish movements later in the day thanks to a downward sloping moving average.
h3The Australian dollar is the biggest winner of today’s major currencies. New data showed new employment rising by over four times the estimation in May. Forecast was at 9.7K, actual came in at 42K.
h3 /h3 h3 AUDUSD/h3 h3
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Sterling is flat ahead of today’s UK interest rate decision . While the central bank is expected to leave interest rates unchanged inflation is over 2% in the UK, this adds to the argument that the Bank of England should hike rates.
h3 /h3 h3 GBPUSDCrude oil inventories came in worse than anticipated which weighed on oil prices. Expected storages were at -2.3M, however the actual amount came in at -1.7M.
Momentum is flat, which indicates that crude may stay around the 44.70 level.
h3Gold was up 0.09% thanks to the Federal Reserve’s interest rate decision. Investors are worried about the lagging inflation in the US and whether the economy will be able to withstand higher interest rates.
h3The lack of inflation in the economy coupled with the rise in interest rates sent bearish tones through equity markets. Essentially, markets have ignored the Fed’s hawkish sentiment favouring hard economic data as the driver.
Despite the Fed’s plan to raise rates once more this year, expectations of another rate hike are at just 35%, down from 50% on Tuesday.
h3 European Equities/h3Europe is taking ques from the US and trading lower this morning. France’s index, the CAC 40, is the biggest loser, dropping 1.19% off its value.
A decline in retail and commodity produces further weighed on European stocks.
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