GBP/USD pops after surprise BOE hike

“When you achieve complete acceptance of the uncertainty of each edge and the uniqueness of each moment, your frustration with trading will end.” – Mark Douglas

 

 

 

HEADLINES

 

 

 

• Sterling, euro jump as BoE hikes rate, ECB cuts stimulus
• BOJ leaves policy unchanged, decides to scale back pandemic-stimulus after March
• Dollar on back foot after hawkish tilts by BoE, ECB
• Gold prices rally to a more than 3-week high as U.S. dollar slips in wake of Fed decision
• Oil Pares Second Weekly Gain as Omicron Muddies Demand Outlook
• Nasdaq ends sharply lower as investors dump growth stocks
• BoE: Another rate hike coming early next year – Rabobank

 

 

 

FOREX

 

 

Sterling, euro jump as BoE hikes rate, ECB cuts stimulus

 

Sterling and the euro jumped on Thursday after the Bank of England became the first major central bank to raise interest rates since the beginning of the pandemic, while the European Central Bank said it would continue to cut its bond purchases.

Sterling rose 0.7% to a two-week high of $1.3368 after the BoE raised its main interest rate to 0.25% from an historic low of 0.1%.

 

BOJ leaves policy unchanged, decides to scale back pandemic-stimulus after March

 

At its December monetary policy meeting, the Bank of Japan (BOJ) left its policy settings unadjusted once again but decided to scale back pandemic stimulus upon reaching the March 2022 deadline. The BOJ decided to taper corporate bond and commercial paper buying. The BOJ maintained its short-term rate target at -0.1% and that for 10-year bond yields around 0%.

USD/JPY remains unfazed near daily lows of 113.60 on the BOJ’s announcement, down 0.05% on the day [Friday].

 

Dollar on back foot after hawkish tilts by BoE, ECB

 

The U.S. dollar remained under pressure on Friday, a day after the Bank of England and European Central Bank adopted more hawkish stances than markets had expected, giving a boost to sterling and the euro.

 

 

COMMODITIES

 

 

Gold prices rally to a more than 3-week high as U.S. dollar slips in wake of Fed decision

 

Gold futures rallied on Thursday as the U.S. dollar slipped, helping lift prices to their highest finish in more than three weeks, a day after the Federal Reserve’s policy update. The rise for bullion came despite the Fed announcing plans to more aggressively slow its bond purchases and projecting three interest-rake hikes next year.

 

Oil Pares Second Weekly Gain as Omicron Muddies Demand Outlook

 

Oil fell for the first time in three days, paring a second weekly gain, as concerns about the impact on demand of the rapidly spreading omicron strain of coronavirus and tighter monetary policy played off against positive U.S. inventory data and a weakening dollar. Futures in New York declined 0.6% [early  Friday] after rising 2.1% on Thursday.

 

 

STOCKS

 

 

Nasdaq ends sharply lower as investors dump growth stocks

 

The Nasdaq ended sharply lower on Thursday as the Federal Reserve's announcement of a faster end to its pandemic-era stimulus pushed investors away from Big Tech and toward more economically sensitive sectors.

 

 

ANALYSIS

 

 

BoE: Another rate hike coming early next year – Rabobank

 

Given that the market had come round to the idea the MPC would delay its first hike to February, it was a surprising move.”

“Along with the Fed’s pivot to inflation fighting, it illustrates that virus risks are not the central banks’ primary concern anymore. We do, however, hold on to our forecast of a much less aggressive tightening cycle than what is currently priced in front-end rates. We forecast another 25 bps rate hike in the next few months, but expect the Bank rate to end the year at 0.50%.”

 

 

CHART

 

 

Nasdaq 100 – Daily Candlesticks

Source: GKFX Prime Metatrader 4

NAS100 is testing the neckline of a possible head and shoulders pattern, which is also supported by the previous peak in September. - Prepared by Trading Writers*

 

 

CALENDAR

 

 

*Times in GMT

Source: FX Street Economic Calendar

 

 

SOURCE

 

 

https://www.fxstreet.com/economic-calendar
https://www.investing.com/news/economy/futures-rise-as-fed-wages-war-on-inflation-2713957
https://www.investing.com/news/stock-market-news/oil-pares-second-weekly-gain-as-omicron-muddies-demand-outlook-2714802
https://www.msn.com/en-us/money/markets/gold-prices-rally-to-a-more-than-3-week-high-as-us-dollar-slips-in-wake-of-fed-decision/ar-AARSpvK
https://www.fxstreet.com/news/boe-another-rate-hike-coming-early-next-year-rabobank-202112161734