- The Fed's decision resulted in maintaining interest rates unchanged, in line with expectations.
- However, there were two dissenting votes within the Fed against the consensus.
- Bowman and Waller voted in favor of lowering interest rates.
- The Fed's statement points to a slightly worse economic situation, paving the way for potential rate cuts in September.
- The market sees a 2/3 chance of a rate cut in September.
- Powell appeared notably hawkish during the second part of the press conference, emphasizing that the Fed needs clear reasons to lower rates.
- Market expectations for a September rate cut have dropped below 50%.
- During the conference, Powell reiterated that many uncertainties remain regarding the economy and tariffs, requiring time to adjust monetary policy accordingly.
- The dollar strengthened after Powell's comment that the Fed is overlooking inflation by not raising rates, which was a rather hawkish statement.
- Following the Fed's decision, EURUSD sharply reversed its earlier gains, with the dollar now dominating the FX market, currently trading near the 100-day EMA at around 1.1426.
- U.S. index futures showed a strong performance throughout the day, staying close to historical highs, but gains were halted and reversed after the Fed's decision.
- US500 is down 0.4%, while US100 is declining by 0.13%.
- Microsoft and Meta Platforms will join the group of the so-called "Magnificent Seven" companies releasing their latest quarterly results today after the market close at 10:00 PM.
- The European session today was positive, with Germany's DAX gaining 0.23% intraday, France's CAC40 adding 0.06%, and Poland's WIG20 rising by 1.06%.
- U.S. GDP for the second quarter grew by 3.0% year-over-year in annualized terms, significantly beating the expected 2.4%, driven primarily by a strong net export contribution of nearly 5%, reversing the trend from Q1 when imports surged in anticipation of Trump’s high tariffs.
- The ADP report showed a job growth of 104,000, well above the expected 75,000.
- The strong U.S. economic data led to further strengthening of the U.S. dollar.
- Eurozone GDP outperformed expectations with a year-over-year growth of 1.4%, against the anticipated 1.2% and the previous 1.5%, while quarter-over-quarter growth was 0.1% compared to the expected 0.0% and the prior 0.6%.
- The Bank of Canada kept rates steady at 2.75%, with the probability of a September rate cut dropping to 19% from 22%, based on swap market data.
- Crude oil inventories rose by 7.7 million barrels, against an expected decrease of 2.6 million barrels and a previous drop of 3.2 million barrels, though the API report showed a smaller increase of 1.5 million barrels; despite the buildup, WTI oil prices remain elevated at $70.50 per barrel.
- Oil prices continue to rise sharply following Trump’s threats to impose strong sanctions on Russia if it does not engage in peace negotiations with Ukraine, with WTI surpassing $70 per barrel.
- Natural gas prices are retreating by nearly 4% today, nearing $3 USD/MMBTU, despite the cooling season typically driving upward trends.
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