FOMC announced a 25 basis point rate hike today - in-line with market expectations. However, as was feared, wording of the statement was changed and it no longer says that Fed anticipates additional tightening to be appropiate but instead will now determine extend to which additional tightening is needed. This is seen as a dovish twist and a strong hint that rate hike pause may be coming. Money markets are now pricing in no change in rates at June and July meeting as well as a rate cut for September meeting. USD is taking hit on those news with EURUSD jumping above 1.1080 in a knee-jerk move. On the other hand, indices are also pulling back slightly as the statement also noted that while the US banking system is sound and resilient, tighter credit conditions will likely weigh on economic activity and hiring. US500 seesawed after the announcement but is now trading around 0.1-0.2% below pre-decision levels.
Market volatility is likely to pick-up around 7:30 pm BST when Fed Chair Powell begins post-meeting press conference and some strong hints may be offered on whether Fed is pausing hike cycle or not. Live coverage of the event will be provided on xStation platform in News section.
EURUSD rallied in a knee-jerk move following FOMC rate decision. However, a big part of the move has been erased and the pair is now trading in the 1.1060 area. Source: xStation5
US500 moved higher in a knee-jerk move after FOMC decision but failed to break above 50-hour moving average (green line). Index turned lower later on and is now testing 200-hour moving average (purple line) in the 4,140 pts area. Source: xStation5
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