Dollar boosted by changes in the Federal Reserve Board

The dollar was heading for the biggest two-day rise of the year after US central bank officials moved ahead of the expected timing of interest rate hikes after the first pandemic of the Federal Reserve Board.

The dollar index, which measures its value against baskets of other major currencies, rose 0.7% after rising nearly 0.6% on Wednesday. The euro fell 0.5% against the dollar to $ 1.193, and the US currency’s appreciation against the corresponding eurozone currencies was 1.5% in two trading sessions.

The Federal Reserve Board said Wednesday that most of its officials are expecting 2023 rate hikeContrary to previous forecasts in 2024, the US economy recovered strongly from the pandemic, with consumer price inflation reaching 5% annually in May. In a widely anticipated move, Fed Chair Jay Powell also said that the world’s most influential central bank has been boosting financial markets since March 2020 with the Fed’s $ 120 billion monthly assets. He said he was “discussing” about reducing purchases.

Brian Nick, chief investment strategist at asset management firm Nuveen, said:Dollar index Barely moved Weeks as traders were waiting for interest rate clues.

Investors are very much looking forward to the Fed starting discussions on reducing support later this summer, with further potential from the August global policymaker Jackson Hall Summit. It is moving to a signal. Brian Rose, chief economist at UBS Global Wealth Management, believes the central bank will give market participants a “sufficient warning” and is trying to put together a so-called taper process before raising interest rates.

The stock market remained close to recent highs as investors focused on raising rates at the US central bank. Outlook For economic growth.

Wall Street’s Best Equity S & P 500 Index was flat in early New York trading after falling 0.5% on Wednesday. The technology-focused Nasdaq Composite index rose 0.3%. Stocks Europe 600 was also flat.

However, changes in federal policymakers’ forecasts for rate hikes also shocked the US Treasury market on Wednesday, prompting a subsequent decline in European government bonds in the next session.

Benchmark 10-year Treasury yields rose 0.09 percentage points on Wednesday night to 1.58 percent in response to a statement from the US Central Bank, reflecting falling prices. However, it was slightly relaxed in European trading hours to 1.557%.

European bond yields rose on Thursday as the Fed bet on other central banks to curb spending on stimulus during the crisis. UK 10-year bond yields rose 0.07 percentage points to 0.828 percent. Germany’s equivalent Bund yield added 0.03 percentage points to minus 0.164 percent.

The Fed has nailed it — but its policy makers can’t see the future, and you can’t.

At Unhedged, Robert Armstrong analyzes the most important market trends and discusses how the best of Wall Street responds to them.sign up Here Send newsletter directly to your inbox on weekdays

Equity investors were convinced that improved US economic growth would boost corporate profits, analysts said, slowing the reaction in the stock market.

The next US rate hike is ” [global] The economy can rise, “said Zerid Osmani, manager of Martin Curry’s Global Portfolio Trust.

If the Federal Reserve was sticking to expecting the next rate hike by 2024, Osmani added: [the US economy] Overheating “.

Juliette Cohen, a strategist at CPR Asset Management, warned that equity investors are showing “compatibility” with inflation. This can hurt a company’s bottom line if higher input costs cannot be passed on to customers. When a company highlights such issues in its next second-quarter earnings call, Cohen said: .. .. It will be a problem. ”

Dollar boosted by changes in the Federal Reserve Board

Source link Dollar boosted by changes in the Federal Reserve Board

Back to top button