Yesterday's US Federal Reserve meeting signaled another rate hike and fewer rate cuts for next year, sending risk appetite sharply lower.
➡️ Yesterday's meeting of the US Federal Reserve sent an aggressive message, leaving the interest rate unchanged for the moment, as expected. The Fed signaled that the terminal rate under the current tightening cycle has not yet been reached, making clear that it plans to raise rates again in 2023, once again, by 0.25%. The Fed also forecast that it will make only two rate cuts of 0.25% each in 2024, fewer than expected. This had the effect of pushing stocks lower and the US dollar higher, as well as sending US Treasury yields to long-term highs, with the 2-year yield hitting its highest level in recent memory. 15 years, well above the 5%.
➡️ Yesterday's release of US CPI (inflation) data was significantly weaker than expected, at an annualized rate of 6.7% when 7.0% was the consensus forecast. The data initially weakened the British pound, but the pound later recovered its value, before collapsing again driven by the US dollar.
➡️ The Forex market is seeing a considerably stronger US dollar following yesterday's Fed meeting. The USD/JPY currency pair reached a new 10-month high price well above ¥148, while the EUR/USD currency pair it traded at a 6-month low and the GBP/USD currency pair to a 3-month low – all of which will be interesting for trend traders. Risk-off sentiment is putting the US dollar in the driver's seat, with the Australian dollar looking the weakest major currency today.
➡️ Stock markets are down across the board, with the MSCI China Index nearing a close at a new 10-month low price.
➡️ Yesterday we saw it crude oil fall in value again after recently reaching a new 10-month high price, while markets showed new signs of rigidity driven by OPEC supply cuts. Commodity markets have been hit by the decline in risk appetite, with They which has made a bearish turn after reaching and rejecting the key long-term resistance level at $1,945.
➡️ Previously released New Zealand GDP data was much better than expected, showing economic growth of 0.9% in the latest quarter, while only 0.4% was expected.
Credit by DailyForex.com