Fed up, ECB up?
Despite last night’s Federal Reserve decision still ringing in the ears of markets this morning, there will be little respite. With the ECB decision only a few hours away, markets will remain attentive. Summer trading conditions have hampered volatility but this could show signs of stress should any surprises be concluded from the combined set of central bank decisions this week. We have already covered the significance of today’s ECB decision given the data emerging from the Eurozone. However, ahead of the release, can we learn anything from last nights decision?
Yesterday’s hike from the Federal Reserve whilst widely expected was still important. The decision to hike by 25 basis points extends the Fed’s colossal hiking cycle that has dragged domestic rates to their highest nominal level for 22 years. Moreover, it recommences the cycle given the FOMC’s decision to leave rates unchanged at the June meeting. Given the encouraging data since that last meeting, a decision to hike last night will reinvigorate global rate expectations and likely push the peak of many rate curves further ahead.
Last night’s decision failed to support the US Dollar largely due to the market’s interpretation of Powell’s comments regarding the September meeting. Leaving the door wide open for a no-hike decision, terminal rate expectations were scaled back. Despite the failure to secure gains following the decision to hike, the US Dollar did not fare so badly as to lose the significant ground it has clawed back versus the Euro in recent sessions. Crucially, the decision to hike could leave markets even more sensitive than usual to any softness in rhetoric or substance from the ECB later today.
Discussion and Analysis by Charles Porter
Click Here to Subscribe to the SGM-FX Newsletter
Related Insights
Daily Brief – Fujairah
Humphrey Percy
Fri 22 May 2026
Fujairah For those readers who are less familiar with the Emirate states that make up the UAE, Fujairah, and Ras Al Khaimah are the less glamorous relations of Dubai and Abu Dhabi with low-cost housing, largely immigrant labour accommodation and heavy industry rather than swanky lifestyle and up market shopping malls. With the new oil […]
Daily Brief – Mariannes
Humphrey Percy
Wed 27 May 2026
Mariannes In addition to gold coins such as South African Krugerrands, Canadian Maple Leafs, and American Gold Eagles, from June 16 you will once again be able to buy French Mariannes. The last time France minted gold coins was mostly in the Napoleonic era and appropriately they were called Napoleons and were issued between 1803 […]
Daily Brief – EU capital markets
Humphrey Percy
Mon 1 Jun 2026
EU capital markets As we have written before, for the EUR to become a global reserve currency requires a number of pre-conditions which largely stem from the establishment of an integrated EU Capital Market. Brussels is accused of dragging its feet if not actually being obstructive so the 6 largest countries have banded together to […]
