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Fed signals March rate hike

“Today, people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value”

– Warren Buffet

 

 

 

HEADLINES

 

 

 

  • Fed Signals March Hike in Play as Battle to Stem Inflation Intensifies
  • Dollar rises to five-week high after Fed policy decision
  • Oil falls on profit-taking after Brent surges to $90 a barrel
  • Gold Extends Losses in Asia After Hawkish Powell Spurs Plunge
  • Wall Street gains evaporate, S&P 500 ends lower on Fed tightening timeline
  • US dollar: Buy the dips on a trend basis into Fed rate liftoff – BofA

 

 

 

FOREX

 

 

 

Fed Signals March Hike in Play as Battle to Stem Inflation Intensifies

 

 

The Federal Reserve on Wednesday appeared to lay out the carpet for a March rate hike after saying it may "soon" begin to raise interest rates to bring red-hot inflation under control.

The Federal Reserve kept interest rates unchanged within the 0% to 0.25% range, but signalled that liftoff in rates could begin soon after the end of the monthly purchases expected in March.

"With inflation well above 2 percent and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate," the Fed said in a statement.

 

 

Dollar rises to five-week high after Fed policy decision

 

 

The dollar rose to a five-week high on Wednesday after the Federal Reserve said it is likely to raise U.S. interest rates in March as expected and later launch a significant reduction in its asset holdings.

The combined moves, along with reaffirmed plans to end its bond purchases in March, will complete a pivot away from the loose U.S. monetary policy that has defined the pandemic era and toward a more urgent fight against inflation.

 

 

 

COMMODITIES

 

 

 

Oil falls on profit-taking after Brent surges to $90 a barrel

 

 

Oil prices fell on Thursday as investors cashed in profits from the 2% gains in the previous session after the U.S. Federal Reserve indicated an interest rate hike in March, leading to a technical correction in surging energy markets.

Futures pulled back amid a broader decline in financial markets triggered by the March interest rate increase telegraphed by the Fed and a surge in the U.S. dollar. Crude prices have surged amid the tensions between Ukraine and Russia, the world's second-largest oil producer, that has fanned fears of disruptions of natural gas to Europe.

 

 

Gold Extends Losses in Asia After Hawkish Powell Spurs Plunge

 

 

Gold extended losses -- after falling the most in two months -- as a more hawkish-than-expected Federal Reserve underscored the central bank’s aggressive approach to tackling inflation.

Bullion edged lower on Thursday in Asia after plunging 1.5% in the previous session as Fed Chair Jerome Powell didn’t rule out raising interest rates at every meeting to rein in the quickest inflation in a generation.

 

 

 

STOCKS

 

 

 

Wall Street gains evaporate, S&P 500 ends lower on Fed tightening timeline

 

 

The S&P 500 ended lower on Wednesday, taking an abrupt nosedive that reversed earlier solid gains after the U.S. Federal Reserve released its statement at the conclusion of its two-day policy meeting.

All three major U.S. stock indexes gyrated wildly in the final minutes of a session that ended with the Dow joining the S&P in negative territory and the Nasdaq eking out a nominal gain.

 

 

 

ANALYSIS

 

 

 

US dollar: Buy the dips on a trend basis into Fed rate liftoff – BofA

 

 

“US dollar gains accelerated from an initially modest level post-statement release throughout Chair Powell's press conference,” per the US bank.

While concluding the findings, the investment bank said, “We remain bullish USD vs. low beta FX and would look to buy dips on a trend basis into rate liftoff as the market further prices in a more aggressive Fed and hence additional monetary policy divergence.”

 

 

 

CHART

 

 

 

Euro / US dollar – Daily Candlesticks

Source: GKFX Prime Metatrader 4

EUR/USD has broken down from its rising channel and an equivalent rising RSI trendline. It is also back below its 50-day moving average, indicating the trend has turned down. - Prepared by Trading Writers*

 

 

 

CALENDAR

 

 

 

*Times in GMT

Source: FX Street Economic Calendar

 

SOURCE:

https://www.fxstreet.com/economic-calendar
https://www.fxstreet.com/news/us-dollar-buy-the-dips-on-a-trend-basis-into-fed-rate-liftoff-bofa-202201262303
https://www.investing.com/news/economy/fed-signals-march-hike-in-play-as-battle-to-stem-inflation-intensifies-2749404
https://www.investing.com/news/stock-market-news/wall-st-opens-higher-ahead-of-fed-announcement-2748693
https://www.investing.com/news/commodities-news/gold-extends-losses-in-asia-after-hawkish-powell-spurs-plunge-2749860
https://www.investing.com/news/economy/euro-on-defensive-as-traders-fret-over-ukraine-tension-hawkish-fed-2748473