Headlines
*FOMC hikes by 75bps for second month in a row, abandons guidance
*Wall Street rallies after Fed Chair suggests rate increases may slow
*Yen climbs to strongest level in three weeks as dollar drops
*US expected to dodge technical recession with weak Q2 growth
US equities rallied with the S&P500 ending the day 2.62% higher. The tech-laden Nasdaq notched a 4.26% rise, marking its biggest daily gain in more than two years. Positive earnings reports from big tech also helped bolster confidence with Alphabet and Microsoft shares jumping 7.7% and 6.7%, respectively. But Meta traded lower after hours as it forecast revenues below estimates. Asian markets are more subdued while US futures are indicating a negative open.
USD sold off reversing its gains from the previous day amid a less hawkish Fed meeting. The DXY lost 0.7% to close at 106.50. Support is 106.11 ahead of 105.78. EUR moved above 1.02 but faces resistance above 1.0260. The euro lagged GBP as EUR/GBP moved below 0.84. USD/JPY is the big mover this morning, off 0.9% and near long-term resistance/support at 135.16. AUD traded near 0.70 and USD/CAD fell to near 1.28.
Event Takeaway – Data dependent FOMC buoys risk assets
The Fed hiked rates by a second 75bps in two months as expected. But crucially Chair Powell was deemed as less hawkish than expected. Hopes are now high that the pace of monetary policy tightening could slow soon. The Fed is seen as open to the possibility of smaller rate rises going forward.
“At some point, it will be appropriate to slow down…” was taken as the signal for the dollar to sell off and risk assets to go bid. “We’re going to be guided by the data” indicated less dramatic rate rises at its next three meetings than in the last two. Recent inflation and job market dynamics potentially suggest a more cautious approach into next year.
Chart of the Day – Cable breaks higher into trendline resistance
We get Q2 US GDP data ahead of the core PCE figure released on Friday. The former risks coming in weak or even negative. Interestingly, Treasury Secretary Yellen has scheduled a press conference today to discuss the economy. This is raising speculation that the growth data may be bad. It’s been quiet for UK data watchers after last week’s splurge and ahead of next week’s BoE meeting.
After a few days of “doji” candlesticks, GBP/USD has followed its peers higher. The strong advance yesterday has taken it above 1.2155 and into the downward trendline from the February high. Bulls will target the 50-day SMA above here at 1.2226 and then 1.2332. Support sits in the mid-1.20s.
Disclaimer
Vantage does not represent or warrant that the material provided here is accurate, current, or complete, and therefore should not be relied upon as such. The information provided here, whether from a third party or not, is not to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any financial instruments; or to participate in any specific trading strategy. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. We advise any readers of this content to seek their own advice. Without the approval of Vantage, reproduction or redistribution of this information is not permitted.
Explore top ESG stocks Nvidia, Microsoft, and Xylem Inc this World Environment Day. Learn about their sustainability efforts and stock …
Whether you’re new to forex trading or a seasoned veteran looking to get back into the swing of things, don’t …
Discover and learn about the major forex pairs, including EUR/USD, USD/JPY, GBP/USD, USD/CAD, AUD/USD and USD/CHF.
Explore top ESG stocks Nvidia, Microsoft, and Xylem Inc this World Environment Day. Learn about their sustainability efforts and stock …
Whether you’re new to forex trading or a seasoned veteran looking to get back into the swing of things, don’t …
Discover and learn about the major forex pairs, including EUR/USD, USD/JPY, GBP/USD, USD/CAD, AUD/USD and USD/CHF.
USD is pushing north to new cycle highs this morning. This came after a narrow range “inside” trading day and recent consolidation.
Since the beginning of this week, the dollar index has remained above 104, on the back of optimism that the US will avert a debt-ceiling …
May has seen a strong rebound in the greenback. Indeed, with three solid weeks of gains, the DXY is closing in on levels last seen …
Vantage is a global, multi-asset broker offering clients access to a nimble and powerful service for trading CFDs on Forex, Commodities, Indices, Shares.
With more than 10 years of market experience and headquartered in Sydney, Vantage now has over 1,000 staff across more than 30 global offices.
Vantage is more than a broker. It provides a trusted trading ecosystem that enables clients to achieve their own success, in a faster and simpler manner.
Be empowered to better capitalise on winning market opportunities when you trade smarter @vantage.
