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Fed minutes signal aggressive tightening

“The way to get started is to quit talking and begin doing.” – Walt Disney

 

 

HEADLINES

 

  • Dollar Surges on Aggressive Fed Expectations; Euro Slips

  • Gold steadies as inflation jitters offset U.S. rate hike bets

  • Oil slips as IEA nations ready for big release from reserves

  • Stocks fall for a second day as rates jump, with the Fed set to tighten policy aggressively

  • GBP/USD could edge lower towards the 1.27/26 area – Scotiabank

  • AUDUSD Near Term: Downside favored

 

 

FOREX

 

Dollar Surges on Aggressive Fed Expectations; Euro Slips

 

The U.S. dollar strengthened Wednesday on raised expectations of aggressive monetary policy tightening by the Federal Reserve, while the euro was weighed by the prospect of additional sanctions on Russia.

The Fed raised interest rates by 25 basis points last month, its first increase since 2018, and expectations have been building that the central bank will move more aggressively at its meeting in May.

 

 

COMMODITIES

 

Gold steadies as inflation jitters offset U.S. rate hike bets

 

Gold prices steadied on Wednesday with concerns over high inflation offsetting expectations of an aggressive interest rate hike by the U.S. Federal Reserve, while markets also awaited the minutes from the central bank’s last policy meeting.

 

Oil slips as IEA nations ready big release from reserves

 

Oil futures edged lower on Wednesday following a surprising rise in U.S. crude stocks and after news that large consuming nations would also release oil from reserves in conjunction with the United States to counter supply worries.

U.S. crude stocks rose by 2.4 million barrels in the latest week, the U.S. Energy Information Administration said, while analysts had expected a drawdown. 

 

 

STOCKS

 

Stocks fall for a second day as rates jump, with the Fed set to tighten policy aggressively

 

Stocks dipped for a second day on Wednesday and rates soared to new heights as investors bet the Federal Reserve is about to aggressively tighten policy to fight inflation, and in turn, slow the economy.

 

 

ANALYSIS

 

GBP/USD could edge lower towards the 1.27/26 area – Scotiabank 

 

“Widening gilts-UST yield differentials have begun to weigh more clearly on the pound in recent trading, but we think there’s room to go in the GBP’s leg lower with the 5-yr spread currently sitting at its most negative level since October 2019.”

“We think it may only be a matter of time before markets begin to chip away at extended BoE pricing and the gap between year-end hike expectations widens further to drag sterling to re-test 1.30 and possibly head toward the 1.26/27 zone.”

 

 

CHART

 

AUDUSD Near Term: Downside favored

 

Technical View: Short position below 0.762. Target 0.75. Conversely, break above 0.762, to open 0.766.

Comments: The pair breaks below support.

 

 

Source: Trading Central
 

 

 

CALENDAR

 

*Times in GMT

 

 

 

Source: FX Street Economic Calendar

 

SOURCES

 

https://www.investing.com/news/forex-news/dollar-surges-on-aggressive-fed-expectations-euro-slips-2798789
https://www.cnbc.com/2022/04/06/gold-markets-dollar-us-treasury-yields.html
https://www.cnbc.com/2022/04/06/oil-markets-russia-sanctions-demand-concerns.html
https://www.cnbc.com/2022/04/05/stock-futures-inch-higher-ahead-of-fed-minutes-release.html
https://www.fxstreet.com/news/gbp-usd-could-edge-lower-towards-the-127-26-area-scotiabank-202204061335