Market Update –
The Federal Reserve raised interest rates by 0.25% on Wednesday, pushing monetary policy into restrictive territory amid tightening credit conditions and signs of financial instability following a wobble in the banking sector.
The Federal Open Market Committee, the FOMC, raised its benchmark rate to a range of 4.75% to 5% from 4.5% to 4.75% previously.
Bullions prices settled on a positive node, as the dollar fell near to 7 week low after the Federal Reserve hiked interest rates as expected, although some language in the central bank’s announcement suggested that interest rates may be close to reaching their peak. The dollar index fell 0.66% to 102.0650 yesterday. Now trading at 102.077, down by 0.45%.
Brent Crude was up 1.84%, at $76.39 a barrel by 11.55pm. U.S. West Texas Intermediate (WTI) gained 1.73%, to $70.63.
MCX Crude oil posted 1.11% gain and settled at 5839.
Gold gained 0.30%, and settled at 58756. comex gold up by 1.55% at $1969.71 silver up by 1.66% and settled at 69309.
The U.S. dollar fell to its lowest level since Feb. 3 against a basket of other currencies, supporting oil demand by making crude cheaper for buyers using other currencies.
Euro hit its highest level in over a month on Wednesday after European Central Bank officials warned that inflation pressure is still too strong to allow any talk of loosening policy in the near term.
Swiss National Bank policy at 2 pm
Switzerland
Swiss National bank will make a decision today. Expectation is to hike the rate by 50 basis points to 1.50% from 100%.
It would have a positive impact on the dollar.
Bank of England Policy
The Bank of England (BoE) will announce its decision on monetary policy. A 25 basis point rate hike to 4.25% is expected.
Dovish rate expectations were further reinforced in the aftermath of recent global banking worries. With interest rate futures pricing a 40% probability that we will have a rate pause from the BoE. This is a stark shift from the 25% at the start of the week and 10% last month.
A rate hike could have a bullish impact on the pound and for base metals.
US
At 6:pm – Unemployment Claims due to release, which could have a negative impact on the dollar. As all data forecasted slightly higher at 1985k than previous reading of 192k.
Same time, Current Account due to release, which could have a neutral impact on dollar. Data foreseen at -213B compared to previous -217B.