Markets expect the US Federal Reserve will raise its interest rate later today by 0.25% to the terminal peak of the current tightening cycle.
- The US Federal Reserve raised its interest rate yesterday by 0.25% to 5.50% as was widely expected. Fed Chair Jerome Powell made it clear that any further hikes would be “data dependent”, but also stated that “we’re going to need to hold policy at restrictive levels for some time”. Markets see this as the final hike within the tightening cycle, meaning the Fed is seen to have reached the “terminal rate”. Stock markets have risen, with the Chinese Hang Seng Index up by more than 1%, and the US Dollar has traded lower, following this release.
- The European Central Bank is holding a policy meeting today and is also expected to hike rates by 0.25%, for the ninth consecutive meeting, to a new higher rate of 4.25%.
- The Bank of Japan will be holding a policy meeting tomorrow, and is expected to leave its negative interest rate unchanged, with the only real uncertainty over its yield cap.
- In the Forex market, long-term trend traders will again be hoping to be long of the EUR/USD currency pair as it begins to rise again in the direction of its long-term bullish trend. If the price will get established below $1.1000, that will call the bullish trend into question. The strongest major currency today is the Australian Dollar, while the US Dollar is the weakest.
- There will be releases today of important US Advance GDP data and Unemployment Claims data. GDP is expected to decline from an annualized increase of 2% to 1.8%.
- Energies are continuing to rally, with WTI Crude Oil futures hitting near a new 3-month high again yesterday, on evidence of supply shortages. This might be of interest to trend traders.