Dollar is slightly softer today as the financial world holds its breath for FOMC rate decision. With the market strongly anticipating a hold, eyes will turn to the dot plot for insights. The pivotal question remains: Will there be hints of another rate hike slated for this year? Furthermore, how the dot plot for 2024 maps out the anticipated timeline and pace of rate cuts will be under close observation. Complementing the dot plot, growth and inflation projections will offer a clearer lens on Fed's viewpoint. Across the pond, Sterling has taken a hit, emerging as the day's weakest performer in the wake of weaker than expected consumer inflation figures. This has led the market to rapidly adjust its expectations, with the possibility of a BoE rate hike tomorrow now seeming less likely. Current swap-market data places this chance at under 50%. Historically, however, BoE's voting in tight situations has been unpredictable. Regardless of the outcome, the consensus is that UK interest rates will probably reach their upper limit post the decision. Elsewhere in the currency markets, Australian Dollar stands out as the top performer, closely trailed by New Zealand Dollar and then Euro. Canadian Dollar's position is mixed, with Japanese Yen and Swiss Franc trailing behind as weaker contenders. Looking at the technical aspects, investor sentiment toward Fed's decision and projections would be significantly illuminated by DOW's performance. To confirm a positive reception, DOW would need to convincingly break 34977.97 resistance level. Should this occur, it would suggest that the corrective fall from 35679.13 has concluded, paving the way for resumption of the larger uptrend. Conversely, should 34029.22 support threshold be breached, it would signify a more negative investor sentiment. As is customary, the direction of Dollar will likely move inversely to market risk sentiment. In Europe, at the time of writing, FTSE is up 0.77%. DAX is up 0.60%. CAC is up 0.52%. Germany 10-year yield is down -0.016 at 2.726. Earlier in Asia, Nikkei dropped -0.66%. Hong Kong HSI dropped -0.62%. China Shanghai SSE dropped -0.52%. Japan 10-year JGB yield rose 0.0064 to 0.725. |
