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Dollar dips as Fed hikes rates

 

“You don’t need to have a 100-person company to develop that idea.” — Larry Page

 

 

HEADLINES

 

 

Dollar dips as Fed hikes rates, flags slowing economy 

Gold retreats from highs of the day after Federal Reserve hikes rates

Oil prices fall over 2% as Fed hikes interest rates

Wall Street rallies to close higher after Fed statement

Bitcoin came close to falling below $20,000 as investors continue to flee cryptocurrencies

GBP/USD: Losses to extend a few cents below 1.20 in coming weeks – Scotiabank

USDJPY Near Term: Upside favored

 

 

FOREX

 

 

CURRENCIES

 

Dollar dips as Fed hikes rates, flags slowing economy 

 

The dollar slipped against a basket of currencies on Wednesday, after the Federal Reserve raised interest rates by 75 basis points in a historic move to fight inflation and projected a slowing economy and rising unemployment in the months to come. 

The rate hike was the biggest made by the U.S. central bank since 1994, and was delivered after recent data showed little progress in its inflation battle.

Against a basket of currencies , the dollar was 0.50% lower at 104.76, after rising as high as 105.79, its strongest since December 2002, in the immediate aftermath of the Fed decision.

 

 

COMMODITIES

 

 

Gold retreats from highs of the day after Federal Reserve hikes rates 

 

Gold prices pulled back from their highs of the day after the Federal Reserve opted for one of the sharpest U.S. rate hikes since 1994. 

U.S. gold futures gained 0.3% to $1,819.

Although gold is considered a hedge against inflation, rate hikes increase the opportunity cost of holding non-yielding bullion.

 

 

ENERGY

 

 

Oil prices fall over 2% as Fed hikes interest rates 

 

 

Oil prices fell more than $3 on Wednesday as markets worried about a fall in demand after the Federal Reserve hiked interest rate by three-quarters of a percentage point. 

The biggest hike by the U.S. central bank since 1994 also sent dollar higher with the dollar index rising to its highest since 2002. A stronger greenback makes U.S. dollar-priced oil more expensive for holders of other currencies, curtailing demand.

But persistent concerns about tight supply meant oil prices were still holding near $120 a barrel.

 

 

STOCKS

 

 

Wall Street rallies to close higher after Fed statement 

 

The S&P 500 rallied on Wednesday to snap a five-session losing skid after a policy announcement by the Federal Reserve that raised interest rates to market expectations as the central bank seeks to fight rising inflation without sparking a recession. 

The Federal Reserve raised its target interest rate by three-quarters of a percentage point, its biggest rate hike since 1994, and projected a slowing economy and rising unemployment in the months to come.

The Dow Jones Industrial Average (.DJI) rose 303.7 points, or 1%, to 30,668.53, the S&P 500 (.SPX) gained 54.51 points, or 1.46%, to 3,789.99 and the Nasdaq Composite (.IXIC) added 270.81 points, or 2.5%, to 11,099.16.

 

 

Bitcoin came close to falling below $20,000 as investors continue to flee cryptocurrencies 

 

The sell-off in cryptocurrencies deepened even further on Wednesday, with bitcoin sinking very close to the key level of $20,000. 

Bitcoin plunged as much as 10% to an intraday low of $20,166, according to Coinbase data. It was last trading at $21,544.37, down about 2.6%, around 4:24 p.m. ET. The world’s largest digital currency has plunged nearly 70% since the peak of the crypto craze in November 2021.

 

 

ANALYSIS

 

 

GBP/USD: Losses to extend a few cents below 1.20 in coming weeks – Scotiabank 

 

“In addition to the UK’s economic weakness, EU-UK tensions over No10’s push to unilaterally re-write the Northern Ireland Protocol and Sturgeon’s push for a Scottish independence vote next year are weighing on GBP sentiment.”

“We think the BoE will deliver a less hawkish message than markets are expecting tomorrow that combined with a large hike from the Fed today risks losses extending a few cents below 1.20 in coming weeks.”

“The GBP would need a clear improvement in broad market sentiment (and so broad USD losses) to clearly recover above the 1.20 zone.” 

 

 

CHART

 

 

USDJPY Near Term: Upside favored

Technical View: Long position above 133.3. Target 135.9. Conversely, break below 133.3, to open 132.6.

Comments: The pair remains supported. Further advance favored.

 

 

 

 

Source: Trading Central 

 

 

CALENDAR

 

 

*Times in GMT

 

 

 

 

Source: FX Street Economic Calendar

 


Footnotes
https://www.reuters.com/markets/europe/dollar-towers-over-peers-markets-bet-large-fed-rate-hike-2022-06-15/
https://www.cnbc.com/2022/06/15/gold-markets-federal-reserve-interest-rate-inflation-recession.html
https://www.cnbc.com/2022/06/15/oil-prices-fall-as-expected-us-interest-rate-hike-looms.html
https://www.reuters.com/markets/europe/focus-fed-futures-edge-higher-ahead-rate-decision-2022-06-15/
https://www.cnbc.com/2022/06/15/bitcoin-plunges-toward-20000-as-crypto-meltdown-continues.html
https://www.fxstreet.com/news/gbp-usd-losses-to-extend-a-few-cents-below-120-in-coming-weeks-scotiabank-202206151346