Forex Today: Hawkish FOMC Questions Inflation Progress, Commodities Tumble - 23 May 2024

The release of the US FOMC meeting minutes yesterday produced a hawkish surprise, with the participants showing serious concerns over persistent inflation and the prospect of rate cuts, leading to a selloff of commodities and boosting the US Dollar.

  1. The US Federal Reserve released the minutes of its most recent policy meeting, which revealed two hawkish factors:
    • Members are broadly worried that despite seeming progress on inflation over recent months, it is proving stubbornly persistent.
    • Members discussed that they may need to hold rates at their currently relatively elevated levels for longer than expected.

However, it is worth noting that according to the CME FedWatch tool, there remains a consensus that the Fed will make its first rate cut at its forthcoming September meeting.

  1. Markets reacted quite strongly to the FOMC minutes release. The most dramatic drops were in metals, with the price of Copper falling by several percentage points in just a few hours, killing the long trend trade there. The precious metals Gold and Silver fell quite strongly. Major equity indices fared much better, as after initial small knocks, the the NASDAQ 100 Index and the S&P 500 Index have risen to new all-time highs, although the the Dow Jones 30 Index is falling. Trend traders and day traders should be interested in getting long of the two major stock indices at all-time highs.
  2. In the Forex market, since the Tokyo open, the strongest major currency is the New Zealand Dollar, while the Japanese Yen is the weakest. The US Dollar is doing little right now, but it rose yesterday and can be expected to get a tailwind from yesterday’s FOMC meeting minutes.
  3. Yesterday’s release of UK CPI data came in slightly higher than expected, with annualized inflation falling from 3.2% to 2.3%. A fall to 2.1% was expected. Core CPI also fell by less than expected. This will reduce the chances of the Bank of England cutting rates at either of its next two policy meetings, which is a disappointment for Prime Minister Sunak who yesterday called a general election for 4 July. The opposition Labour Party is expected to win by a landslide and return to power for the first time in 14 years.
  4. There will be releases today of Flash Manufacturing and Services PMI data for the USA, Germany, the UK, and France.

Ready to trade our daily Forex analysis? We’ve made a list of the best online forex trading platform worth trading with. 


Industry Responses: Strategies For Overcoming Regulatory Challenges In US Bitcoin ETF Approval

The journey towards the approval of Bitcoin Exchange-Traded Funds (ETFs) in the United States has been fraught with regu... Read more

Navigating Market Volatility: Assessing The Impact Of A Strengthening Dollar On US Stocks

In recent months, US stock markets have experienced a notable rally, with indices reaching new highs. However, amidst th... Read more

Forex Today: Feds Kashkari Suggests Delaying Rate Cut To December - 17 June 2024

Fed’s Kashkari Males Implicitly Hawkish Statement; Fears Grow of Far-Right Victory in France; Indonesian Rupiah at 4-Y... Read more

US Inflation Dips Unexpectedly To 3.3% In May, Fed Remains Cautious - 13 June 2024

There was good news on the inflation front, as inflation decelerated in May and was lower than anticipated. Read more

Forex Today: Lower US Inflation Sends Stocks Soaring Despite Cautious Fed - 13 June 2024

US inflation data showed no increases in prices over the past month, leading to an expected fall in annualized CPI which... Read more

Forex Today: US Stock Indices Close On Record Highs Ahead Of CPI, FOMC - 11 June 2024

US Stock Market Continues Advance, European Markets Also Bullish; Gold Near 2-Month Low; Euro Finds Support; Indonesian ... Read more