The US Federal Reserve raised rates by 0.50% and raised its forecast for its anticipated rate maximum in 2023 to 5.1%, sinking stocks and boosting the US Dollar.
- The US Federal Reserve hiked rates, as expected, by 0.50% to 4.50%, but also delivered a minor hawkish surprise by raising its forecast of the terminal rate likely to be reached next year to 5.1%. Stocks and other risky assets had been rising against the US Dollar before the statement, but then fell as markets digested the higher-than-expected rates in 2023, as Fed Chair Powell indicated the Fed still has a “ways to go” on raising rates.
- Policy meetings today at the European Central Bank, the Bank of England, and the Swiss National Bank are each expected to deliver rate hikes of 0.50%. The conjunction of central bank data and forecasts from three major institutions on the same day is likely to inject volatility into the Forex market today.
- The short-term outlook for the market is likely to depend upon whether more focus is placed on lower-than-expected US inflation data earlier this week, or the higher rates expected from the Fed. Long-term bullish trends remain technically valid in Silver and the EUR/USD currency pair. The US Dollar gained during most of the Asian session, but there are initially signs that it is not being bought strongly anymore, so there is a chance for trends to reassert themselves today against the US Dollar.
- Yesterday’s release of UK CPI (inflation) data showed a fall in the annualized rate from 11.1% to 10.7% when a rate of 10.9% had been widely expected. This is maybe a small piece of good news on global inflation.
- New Zealand GDP data has been released showing the economy growing at 2.0% quarter-on-quarter, exceeding expectations of only 0.8%.
- Australian unemployment data came in better than expected, with net new jobs of 64k created against an expected 19k.
- There will be releases today of US retail sales data and the empire state manufacturing index.
- Daily new global coronavirus cases rose last week for the fourth consecutive week.
- It is estimated that 68.6% of the world’s population has received at least one dose of a coronavirus vaccination.
- Total confirmed new coronavirus cases worldwide stand at over 655.5 million with an average case fatality rate of 1.02%.
- The rate of new coronavirus infections appears to now be significantly increasing only in Brazil, Guatemala, Japan, Mongolia, and New Zealand.