Wall St rallies after Fed hikes rates

“You will either step forward into growth or you will step back into safety.” — Abraham Maslow

 

 

HEADLINES

 

 

• Fed hikes interest rates, signals aggressive battle against inflation
• Dollar index rises after Fed announcement
• Oil dips on Russia-Ukraine talks, U.S. inventory data
• Gold settles lower, sees volatile trade after Fed announces first rate hike since 2018
• Dow ends more than 500 points higher after Fed delivers rate hike
• BoE Preview - ING
• AUDUSD Near Term: Downside favored

 

 

FOREX

 

 

Fed hikes interest rates, signals aggressive battle against inflation

 

The Federal Reserve on Wednesday raised interest rates by a quarter of a percentage point and laid out an aggressive plan to push borrowing costs to restrictive levels by next year as concerns about high inflation and the war in Ukraine overtook the risks of the coronavirus pandemic.

The U.S. central bank, in a surprise move, projected the equivalent of quarter-percentage-point rate increases at each of its six remaining policy meetings this year, which would push its benchmark overnight interest rate to a range between 1.75% to 2.00% by the end of 2022.

 

Dollar index rises after Fed announcement

 

The dollar index turned up for the day on Wednesday shortly after the U.S. Federal Reserve raised interest rates by the expected quarter of a percentage point and projected its policy rate would go as high as 2% by the end of the year.

Earlier in the day dollar had fallen 0.6% as the euro, a major component of the index, climbed amid signs of compromise by Russia and Ukraine in "more realistic" peace talks.

 

 

COMMODITIES

 

 

Oil dips on Russia-Ukraine talks, U.S. inventory data

 

Oil lost ground for the fifth time in the last six days on Wednesday as traders reacted to hoped-for progress in Russia-Ukraine peace talks and a surprising increase in U.S. inventories.

The oil market has been on a roller-coaster for more than two weeks, and both major benchmarks have traded in their largest high-to-low range over the last 30 days than at any time since the middle of 2020.

 

Gold settles lower, sees volatile trade after Fed announces first rate hike since 2018

 

Gold futures finished Wednesday at their lowest price in more than two weeks, then saw volatile moves in electronic trading after the Federal Reserve announced the first interest-rate hike since 2018 to combat inflation.

The contract had lost $20.50, or 1.1%, to settle at $1,909.20 Wednesday about a half-hour before the Fed news. That was the lowest most-active contract finish since Feb. 28, according to FactSet data.

 

 

STOCKS

 

 

Dow ends more than 500 points higher after Fed delivers rate hike

 

Stocks ended sharply higher Wednesday in a session marked by big swings after the Federal Reserve delivered a widely expected quarter-point rate hike and pencilled in a series of increases over the rest of the year. The Dow Jones Industrial Average DJIA, +1.55% dipped into negative territory after the Fed announcement but roared back by the closing bell to end the session up around 519 points, or 1.5%, near 34,063.

 

 

ANALYSIS

 

 

BoE Preview - ING

 

“We suspect the BoE will opt for another 25bp rate rise, rather than a larger 50bp move. Markets are once again pricing six rate rises this year, and comments from officials have offered some modest pushback against these expectations. Our own view is that after a couple more hikes, the committee is likely to pause and put greater emphasis on the deteriorating growth backdrop. After all, such a sharp rise in oil and gas prices is more likely to be medium-term disinflationary, even if it keeps headline inflation rates higher this year.”

 

 

CHART

 

 

AUDUSD Near Term: Downside favored

 

Technical View: Short position below 0.73. Target 0.716. Conversely, break above 0.73, to open 0.734.

Comments: The pair breaks below support.

Source: Trading Central
 

 

CALENDAR

 

 

*Times in GMT

 

 

Source: FX Street Economic Calendar

SOURCES

https://www.fxstreet.com/economic-calendar
https://www.fxstreet.com/news/boe-preview-forecasts-from-10-major-banks-eyeing-a-hat-trick-caught-between-a-rock-and-a-hard-place-202203161547
https://www.reuters.com/world/us/all-systems-go-feds-liftoff-us-interest-rates-2022-03-16/
https://www.reuters.com/business/dollar-near-5-year-peak-yen-before-fed-aussie-weak-amid-china-risks-2022-03-16/
https://www.reuters.com/business/energy/oil-prices-climb-russia-ukraine-ceasefire-talks-stoke-volatile-trading-2022-03-16/
https://www.marketwatch.com/story/gold-edges-back-ahead-of-likely-first-fed-rate-hike-since-2018-11647433171
https://www.marketwatch.com/story/dow-ends-more-than-500-points-higher-after-fed-delivers-rate-hike-2022-03-16?mod=MW_article_top_stories