Forex Today: Hawkish FOMC Minutes Sends Stocks, Bonds Sharply Lower

Adam Lemon

US stock markets pull back from record highs while the Japanese yen weakens further.

  • Yesterday saw the FOMC release the minutes of its latest meeting. The minutes showed inflation was no longer described as “transitory”, and that the members thought the Fed could begin to shrink its balance sheets and begin to hike rates earlier than had been expected. This hawkish surprise sent the S&P 500 Index sharply lower by almost 100 points, and the NASDAQ 100 Index to near 2-month lows. The USD is a little higher and the Japanese yen has strengthened on this blow to risk sentiment.
  • In the Forex market, latent strength remains in the US dollar as it may be boosted by the more hawkish FOMC meeting minutes, but we see most strength right now in the euro and the greatest weakness in the Australian dollar. This puts a bearish AUD/JPY at the center of the Forex market right now on worsening risk sentiment.

Advertisement
Heavy swings in the dollar make highly profitable trades

Make Your Move Now!

  • Yesterday’s ADP non-farm employment change forecast was made much higher than had been expected, forecasting that Friday will see an announcement of a net new 807k jobs, well above the 405k which had been the consensus forecast. If this forecast is correct, it will likely boost the US dollar.
  • Today brings a release of US ISM Services PMI data.
  • Daily new coronavirus cases soar to new all-time records, with more than 2.5 million new cases recorded globally yesterday for the first time ever.
  • Data suggests that the globally rampant omicron coronavirus variant, while considerably more infectious, has notably milder effects than previous coronavirus strains, with an estimated 70% reduction in the probability of hospitalization. This is potentially very good news for both health and economy, and this has helped to drive recent bullishness in stock markets.
  • It is estimated that 58.6% of the world’s population has received at least one dose of a coronavirus vaccination.
  • Total confirmed new coronavirus cases worldwide stand at over 298.3 million with an average case fatality rate of 1.84%.
  • The rate of new coronavirus infections appears to now be increasing most quickly in Albania, Algeria, Argentina, Australia, Bahamas, Bahrain, Barbados, Belgium, Belize, Bolivia, Bulgaria, Burkina Faso, Canada, Colombia, Costa Rica, Croatia, Cyprus, Dominican Republic, Estonia, Fiji, Finland, France, Greece, Iceland, Israel, Italy, Jamaica, Kuwait, Lebanon, Luxembourg, Mali, Malta, Mexico, Netherlands, Niger, Panama, Peru, Portugal, Qatar, San Marino, Saudi Arabia, Serbia, Slovenia, Spain, Sweden, Switzerland, the UAE, the UK, Uruguay, and the USA.
Adam Lemon

Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.
Learn more from Adam in his free lessons at FX Academy

Did you like what you read? Let us know what you think!

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

0 User comments

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

Read more
Add new comment
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.