Forex Today: Market Scales Back Fed Rate Hike Expectations

Adam Lemon

Markets are revising lower the estimated coming rate hike from the US Federal Reserve, causing a weaker US Dollar and stronger stock markets.

  • Analysts are scaling back their formerly higher expectations of a forthcoming US rate hike as high as 1% which had been set after annualized US inflation reached a new 40-year high annualized rate of 9.1% last week. A second successive rate hike of 0.75% is now the consensus expectation following remarks from Fed member Bostic and lower than predicted inflation expectations data. This is causing a selloff in the US Dollar and rises in stock markets.
  • New Zealand CPI (inflation) data released a few hours ago shows annualized inflation hitting 7.3%, an increase from the previous level of 6.9% and the highest annualized rate seen since 1990. The market had been expecting a lower rate of 7.1%. The data initially boosted the Kiwi, but the rates for the NZD/USD currency pair and the NZD/JPY currency cross have fallen back to where they were before this release.

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The yen is a popular asset during turbulent times.
  • There will be a release of The Reserve Bank of Australia’s Monetary Policy Meeting Minutes later today.
  • It is a public holiday in Japan today.
  • Daily new coronavirus cases globally fell for the first week since early June, reversing the short-term trend of an increasing number of confirmed cases.
  • It is estimated that 66.8% of the world’s population has received at least one dose of a coronavirus vaccination, while approximately 7.2% of the global population is confirmed to have contracted the virus at some time, although the true number is highly likely to be much larger.  
  • Total confirmed new coronavirus cases worldwide stand at over 567.8 million with an average case fatality rate of 1.12%.  
  • The rate of new coronavirus infections appears to now be most significantly increasing in Belgium, Bulgaria, Croatia, Peru, Serbia, Albania, Barbados, Brunei, Bolivia, Cyprus, Guatemala, Italy, Japan, Kosovo, Lebanon, Mexico, Montenegro, Paraguay, Switzerland, and Tunisia.  
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

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