A look at the latest Fed Fund rate probabilities currently suggests that the Federal Reserve has raised interest rates for the last time in its battle against above-target inflation. While these probabilities constantly change, and inflation remains uncomfortably high and sticky, chair Powell said that the FOMC had discussed leaving interest rates unchanged yesterday due to the recent banking crisis. In his statement, chair Powell said, ‘In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks...

Today the Bank of England is expected to hike by 25 bp after the Swiss National Bank hiked by the expected 50 bp and also announced the banking crisis over. These hikes were needed not only for inflation but to signal the banking crisis has ended. The incoming data today includes the usual Thursday weekly jobless claims, new home sales, the Kansas City and Chicago Fed indices, and the Q4 current account. The Treasury will auction 10-year TIPS. Now if only the TIPS website were even remotely usable. The top takeaway from yesterday’s hike and speech is that the market...

Yesterday’s Federal Reserve (Fed) decision was relatively hawkish – depending on where you are coming from (I am coming from a bank crisis). The Fed raised the rates by 25bp, as broadly priced in, but Fed Chair Jerome Powell signaled that there would be another 25bp hike on the wire before this tightening cycle ends. QT and dot plot were unchanged. Stocks fell, while Treasuries rallied as a sign that not everybody interpreted the Fed decision equally dovish, or hawkish. US futures are in the positive at the time of recording. It is well possible that the post-FOMC equity selloff quickly reverses, at the...

In 2022, the Federal Reserve may find itself returning to its dovish self, weighing on the dollar. The easing of supply chains could push global inflation lower, improving the mood. Covid-19 will likely pop up during the year but extend its retreat. Rising geopolitical tensions could counter dollar selling. America’s mid-term elections mean Democrats will scramble to legislate. One year up, one year down for the dollar? After two flip-flop years, there are good reasons to expect the greenback to have a rather red 2022.  In 2020, the pandemic outbreak initially sent it up, while optimism about the recovery turned...

EUR/USD is trading flat in the session but is subject to volatility in financial markets pertaining to the escalations of the Ukraine crisis. The single currency has travelled from a high of 1.1319 to a low of 1.1296, weighed by risk-off tones following critical developments at the Kremlin. The EUR/USD pair trades at the lower end of its latest range, approaching a Fibonacci support level at 1.1305, the 50% retracement of the latest daily advance. The pair has neared a bearish 100 SMA before retreating sharply, and now struggles around a directionless 20 SMA. Technical indicators have kept retreating within positive levels,...

The AUD/USD pair advanced for a fourth consecutive day but was unable to hold on to gains and is currently hovering around the 61.8% retracement of its latest daily decline at 0.7181. Technical readings in the daily chart favor a bullish extension if the pair manages to advance beyond the daily high, as it will be surpassing the 100 SMA. Technical indicators, in the meantime, crossed their midlines into positive territory, maintaining modestly bullish slopes. In the 4-hour chart, the pair is developing above all of its moving averages, with the 20 SMA advancing above the 100 SMA but still...