ECB, BoE, SNB All Expected to Hike by 0.50%

The US Federal Reserve raised rates by 0.50% and raised its forecast for its anticipated rate maximum in 2023 to 5.1%, sinking stocks and boosting the US Dollar.

Advertisement

1. The US Federal Reserve hiked rates, as expected, by 0.50% to 4.50%, but also delivered a minor hawkish surprise by raising its forecast of the terminal rate likely to be reached next year to 5.1%. Stocks and other risky assets had been rising against the US Dollar before the statement, but then fell as markets digested the higher-than-expected rates in 2023, as Fed Chair Powell indicated the Fed still has a “ways to go” on raising rates.
2. Policy meetings today at the European Central Bank, the Bank of England, and the Swiss National Bank are each expected to deliver rate hikes of 0.50%. The conjunction of central bank data and forecasts from three major institutions on the same day is likely to inject volatility into the Forex market today.
3. The short-term outlook for the market is likely to depend upon whether more focus is placed on lower-than-expected US inflation data earlier this week, or the higher rates expected from the Fed. Long-term bullish trends remain technically valid in Silver and the EUR/USD currency pair. The US Dollar gained during most of the Asian session, but there are initially signs that it is not being bought strongly anymore, so there is a chance for trends to reassert themselves today against the US Dollar.
4. Yesterday’s release of UK CPI (inflation) data showed a fall in the annualized rate from 11.1% to 10.7% when a rate of 10.9% had been widely expected. This is maybe a small piece of good news on global inflation.
5. New Zealand GDP data has been released showing the economy growing at 2.0% quarter-on-quarter, exceeding expectations of only 0.8%.
6. Australian unemployment data came in better than expected, with net new jobs of 64k created against an expected 19k.
7. There will be releases today of US retail sales data and the empire state manufacturing index.
8. Daily new global coronavirus cases rose last week for the fourth consecutive week.  
9. It is estimated that 68.6% of the world’s population has received at least one dose of a coronavirus vaccination.
10. Total confirmed new coronavirus cases worldwide stand at over 655.5 million with an average case fatality rate of 1.02%.  
11. The rate of new coronavirus infections appears to now be significantly increasing only in Brazil, Guatemala, Japan, Mongolia, and New Zealand.