It has been all about interest rates in the past 24 hours as the Federal Reserve opted to hike. While the Bank of Japan decided to stay put. We also await rate decisions from the Swiss National Bank and the Bank of England. This and more on the daily Forex news and trade opportunities.
March 16, AtoZForex – On the daily Forex news list, we look at other high impact news including the US building permits and Australia’s labour data.
#1 Alas, the Fed hikes!
The US policymakers have in recent years built the habit of making it quite clear when they want to hike, by applying a form of forward guidance. Before the decision, the futures markets priced in a 95% chance of a rate hike. The Fed didn’t disappoint. They opted to raise rates to 1.00%, marking the third hike in 11 years. The policy makers recognised that inflation is moving closer to the Fed’s target. Markets now expect two more hikes this year.
#2 Australia 12-Month Consumer Inflation Expectations Dips
The consumer inflation, which is a key measure of Australia’s inflation situation declined slightly in March. Although the underlying trend pointed to firmer price growth in the year ahead. The Melbourne Institute’s 12-month gauge of inflation expectations was 4% in March, after falling to 4.1% in February. Inflation expectations reached 4.3% in January, the highest in almost three years. Also, the employment change fell to -6.4 while the unemployment rate fell to 5.9%, sending the Aussie down a tad.
#3 Euro Reaches One-Month High on Dutch votes
The euro traded near its highest level in over a month, following an exit poll which showed Dutch Prime Minister Mark Rutte’s Liberals easily beat the anti-Islam Freedom Party of Geert Wilders in Wednesday’s election, therefore allaying concerns about the spread of populism in the currency bloc. The bloc currency had the largest advance against the dollar since June on Wednesday.
Opportunity: Buy EURUSD on dips
#4 BOJ holds rate
The Bank of japan has opted to keep rates on hold at -0.1%, by a 7-2 majority vote. The Bank will continue to conduct purchases at current pace — an annual pace of increase in the amount outstanding of its JGB holdings of about 80 trillion yen — aiming to achieve the target level of the long-term interest rate specified by the guideline.
Opportunity: Sell GBPJPY on rallies
#5 MPC to leave rates unchanged
The monetary policy committee is expected to leave rates unchanged at 0.25%, by a unanimous vote of 0-0-9. In this era of greater transparency and enhanced communication, the bank’s ensuing press conference will give more insight into the mindset of the policy makers.
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