Dollar Hit After Dovish Fed

The much awaiting Fed meeting came and went this morning with the well anticipated 25 bps hike taking place. The dollar took a hit on the statement as the Fed came out slightly more dovish than some market participants were hoping with the dollar index down 70 points on the day. There was some expectation out in the market that forward guidance might become more hawkish but the Fed kept it’s rate outlook unchanged with expectation staying at 3 hikes in 2018 whilst maintaining close eye on economic data.

Elsewhere the next step of Theresa May’s Brexit plans took a bit of a hit as she lost a key vote in Parliament on how Brexit is to be managed which had put pressure on the sterling alongside a slight increase in the unemployment rate earlier in the day.

Traders don’t have long today to digest the latest move from the Fed as we have a very heavy central bank and data calendar ahead, it kicks off with the Australian employment numbers this morning in the Asian session and is quickly followed by Chinese Industrial Production numbers. We have a huge London session ahead with 3 separate central bank announcements, the Swiss National Bank is first off the blocks followed by the Bank of England and last by certainly by no means least we have the ECB. All are expected to keep rates on hold but we expect to see volatility from the various statements and press conferences that follow.

If that wasn’t enough excitement for traders we still have the US Retail Sales numbers due out at the start of the New York session, these are actually released at the same time as the ECB press conference, so expect further volatility across the Euro at that time.

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