The FOMC meeting itself looked a bit hawkish at first as the statement was quite upbeat and the so called dot-plot saw no single FOMC member seeing a rate cut in 2020 or 2021 but that wasn’t enough to derail positive sentiment.
It looks as FOMC bills purchases are enough to secure secular USD depreciation and even upbeat Fed is not enough to trigger a new wave of USD buying. Furthermore President Powell pledged not to raise rates until inflation is sufficiently high for sufficiently long time (which in his mouths sounds nearly like “never”). For markets this was enough especially as investors are sure that in the event of bigger stock market correction the Fed will ease again.
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Dot-plot shows no chances for more cuts but markets are not so sure. Source: Bloomberg
The reaction bodes well for precious metals that are defending key supports and for the EURUSD that is finally showing some signs of life. After forming a double-bottom at a higher low the pair managed to break out from the long-term downward wedge and is looking for a test of 1.1180 as the first hurdle. On the fx front the attention will turn to the GBP as UK goes to polls tomorrow.
EURUSD is starting to look more and more promising technically. Source: xStation5
Indices are up too but here the final word will belong to Trump that could ruin the party by implementing the Dec’15 tariffs. Markets are fully pricing the scenario in which these tariffs are at least delayed.
