The minutes from the Federal Reserve on Wednesday, which we were hoping would provide additional clarity on its interest rate expectations, instead displayed the uncertainty the central bank has about how to proceed, largely due to the unknown effects of what Donald Trump’s stimulus plans will have on the economy and inflation.
Oil traders from around the world, including the United States, Britain and Brazil, have tripled their sales to Asia as they take advantage of an emerging supply gap following OPEC-led production cuts announced late last year.
Super Thursday marks the day once a quarter when the Bank of England announces its latest monetary policy decision, releases the minutes of the meeting, its quarterly inflation report including new forecasts and Governor Mark Carney chairs a press conference. Needless to say, it’s often quite an eventful day, particularly in post-Brexit Britain when so much uncertainty exists for the economy.
The Federal Reserve kept interest rates unchanged on Wednesday in its first meeting since President Donald Trump took office, but painted a relatively upbeat picture of the U.S. economy that suggested it was on track to tighten monetary policy this year.
Information received since the Federal Open Market Committee met in December indicates that the labor market has continued to strengthen and that economic activity has continued to expand at a moderate pace. Job gains remained solid and the unemployment rate stayed near its recent low.
Whether you consider 2016 a good or a bad year, it was by no doubt the year of surprises. Not just because Donald Trump was elected the 45th president of the United Stated or because the UK decided to leave the EU, but the markets’ reactions to these events were even more surprising and most forecasters got it wrong.
In the 1993 movie Groundhog Day, Bill Murray plays an arrogant weatherman who gets stuck in a "time loop" and is forced to relive the same day hundreds of times. Lately, the Federal Reserve has been feeling a bit like Bill Murray on a slightly longer timeframe. Tell me if this sounds familiar...
Global equities, currencies and commodities took a hit after the Federal Reserve’s decision to raise interest rates on Wednesday for the second time in a decade. The 25-basis points increase was almost fully priced in and didn’t take market participants by surprise, but the strong reaction seen in the dollar and U.S. bond yields was due to the new projections for 2017, which showed the central bank now expects three rate hikes for 2017 rather than only two seen in September.
Sterling was under renewed pressure against the Dollar during late trading on Wednesday as sellers exploited the hawkish FOMC meeting to send the GBP/USD to fresh two-week lows at 1.2507. The ongoing Brexit uncertainty this quarter has made it increasingly difficult for sterling to maintain gains while dollar’s explosive rebound from the rising prospects of further U.S. rate hikes in 2017 could expose the GBP/USD to steeper losses.
The U.S. based indices closed lower this afternoon on the heels of the FOMC rate hike of 25 basis points. Asian stocks closed mixed in the overnight session as equities in Europe were lower this morning. As the FOMC’s decision to raise rates resonated in the markets, traders saw the strength in the U.S. dollar continue to multi-year highs.