Neel Kashkari, the president of the Federal Reserve Bank of Minneapolis, expressed uncertainty about whether the central bank has finished its rate hikes, pointing to the ongoing robust economic climate. Kashkari also indicated the possibility of more than one rate increase. Although the Federal Reserve's recent meeting maintained the federal funds rate at 5.25% to 5.5%, Kashkari emphasized that data would guide future decisions. He noted that strong consumer spending and the resilience of the housing and automotive sectors, even under a stringent monetary policy, raise doubts about whether the current monetary stance can swiftly curb inflation. The Fed anticipates one more rate hike this year, foreseeing consistently higher rates as the economy outpaces prior projections.
Despite the tightening rhetoric, the market currently predicts only a 23% chance of a 25 basis point increase at the next meeting on November 1st.
EURUSD
For several days, markets have witnessed a flight from risky assets, declines in indices, and a rising dollar value. Today brings even further strengthening. EURUSD is currently battling to maintain the 1.05 level. However, given the trend over recent weeks, a downward breach seems imminent. The RSI indicator shows significant overselling, while the MACD remains in a zone indicating a downward trend. Nevertheless, one can discern divergence in this indicator, suggesting weakening momentum.
Source: xStation 5
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