The U.S. Dollar finds itself in the familiar mixed-bag territory this morning after the Federal Reserve’s policy announcement and press conference yesterday afternoon.
Overview
While initially, the central bank’s 25 basis point interest rate hike took a hawkish tone as markets priced in at least two more raises at subsequent meetings, Jerome Powell’s afternoon press conference swung the dollar toward negative territory.After the Fed’s initial promise of “ongoing” rate hikes, Powell took the stage and labeled the recent disinflation trend as “gratifying,” raising doubts about the central bank’s continued resolve to tighten monetary policy.Yesterday’s trading sessions saw broad losses for the greenback, but most courses have reversed this morning as central banks across the world take a more dovish tone even with announcements of rate hikes.
What to Watch Today…
- No major economic events are scheduled for today
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EUR ⇓
The single currency traded higher against the buck after the Federal Reserve’s interest rate decision yesterday afternoon and held gains overnight but started to slip this morning as the European Central Bank announced a 50 basis point interest rate hike.As this policy change was in line with market expectations, the Euro initially held its ground after the announcement, but as Christine Lagarde speaks prices are falling sharply. She highlighted that economic activity through the region has slowed markedly, leaving less room for continued tightening through the year.
GBP ⇓
Pound Sterling prices fell overnight and into this morning despite the Bank of England’s 50 basis point interest rate hike. Current forecasts find it unlikely that the central bank will continue to raise rates beyond Q1 of this year.Ultimately, socioeconomic conditions throughout the United Kingdom outweigh any hawkishness from the bank. Strikes across several industries continue to disrupt the economy, and both UK and EU officials attempt to manage expectations on a potential agreement on the Northern Ireland protocol.
