This was the lowest reading in the current economic cycle and the lowest since 1973 which maintained confidence in a very firm labour market and expectations that the Federal Reserve would move to tighten policy in the short term.
Fed Governor Powell maintained an optimistic tone on the outlook and stated that the Fed was very close to meeting its 2% target while a rate increase is on the table for discussion at the March FOMC meeting.
Increased expectations of a March Fed tightening continued to support the dollar, although the Euro did find some support on approach to the 1.0500 level as markets had already moved closer to pricing in a US rate hike with futures markets indicating over a 75% chance of a move.
The Euro found some support at the 1.0500 area without making any significant headway as markets waited for comments from Fed Chair Yellen and Vice-Chair Fischer after the European close on Friday.
Calling the bluff As expected, the Federal Reserve raised interest rates in the United States yesterday evening by a further 50 basis points. As a result of this policy adjustment, immediate target policy levels now stand at 4.25-4.5%. As also expected, the Fed pushed back fairly hard on the idea that it is ready to […]
Pencil to pen As with any year ahead, 2023 has been fervently speculated over by market participants. Whilst forecasts for the forthcoming year take great priority every year, 2023 has perhaps the most divergent set of forecasts between analysts and institutions on recent record. Across asset classes and between institutions the core themes expected to […]
False Illusions On Friday last week markets had got very exuberant over comments made by the Federal Reserve Chair the day prior. As a result of the interpretation of those comments, the US Dollar had dropped several cents to trade at its recent lows. There was a narrative that was being pieced together and justified […]