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Forex Today: Expecting Rate Hikes from Bank of England and Swiss National Banks

Markets are awaiting policy meetings at the Bank of England and the Swiss National Bank today, both of which are expected to result in a 25bps rate hike.

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    1. There will be policy meetings today at both the Bank of England and the Swiss National Bank. Both central banks are expected to announce higher rates today with increases of 0.25%. If the Bank of England makes a surprise decision to pass on the hike, the Pound would likely fall quite sharply.
    2. Fed Chair Jerome Powell testified on monetary policy before the House of Representatives yesterday, taking quite a hawkish tone and emphasizing the likelihood of further rates hikes and the necessity of continuing to focus on inflation. His words helped push down stock markets, especially in the US where major indices closed lower, and to push up US Dollar yields. However, the US Dollar continued to fall against most other currencies, in line with its long-term bearish trend.
    3. In the Forex market, the Euro is the strongest major currency while the Aussie is the weakest major currency, putting the EUR/AUD currency cross in focus. The USD/JPY currency pair yesterday reached a new 7-month high price above ¥142.37, so this pair will continue to attract the interest of trend traders on the long side, despite the relative weakness of the US Dollar.
    4. Bitcoin had a second day of very strong gains yesterday and seems to have got bullishly established above the round number at $30k. Its price is currently rising and is not far from the 1-year high price at $31,035. The gains are seen as mostly due to BlackRock and a few other houses having just filed for authorization for Bitcoin ETFs, leading to speculation there is an increased likelihood of their approval, which would make Bitcoin more accessible to retail investors.
    5. Fed Chair Jerome Powell will be testifying before the Senate today on monetary policy.
    6. UK CPI (inflation) data released yesterday showed UK inflation refusing to fall, remaining at an annualized rate of 8.7%, while core CPI increased to a 30-year high. This is poor news for the UK’s inflation outlook and seems to have presented the Pound from rising despite its recent strength.
    7. The Corn ETF CORN rose by almost 5% yesterday to reach a 7-month high price yesterday.
    Adam Lemon
    About 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.

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