According to Rick Rieder (BlackRock) the high level of employment will likely keep inflation high and warrant a 6% interest rate for the Fed
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The EUR/USD saw its largest decline in over a month as investors no longer can ignore signals that the Fed’s Fund Rate will indeed significantly increase. Many investors believed the Fund Rate would only slightly increase as the rate is already considerably high; however, this is not likely to stop the Fed. The asset over the past 24 hours has declined by 1.25%.
EUR/USD - The US Dollar Surges on the Fed’s Hawkish Tone
During yesterday’s market analysis, we mentioned the resistance level at 1.0688 and the bearish breakout level at 1.06675. Analysts have been cautious, especially considering the Fed’s ultra-hawkish tone. The bearish breakout level was indeed triggered, giving a signal to traders, and the price eventually declined by 1.10%. Technical analysis still points towards a downward trend in the medium to longer term. Though, investors will be cautious about a retracement and the current loss of momentum. Ideally, traders will be looking for momentum to increase again.
EUR/USD 30-Minute Chart on March 8th
The next interest hike is almost certainly a 50 basis point hike, and the terminal rate will officially increase to 6%. The Chairmen, Mr. Jerome Powell, has advised that the economy, specifically employment, has been more resilient than expected. The chairmen added, “if economic data indicate that faster tightening is warranted, we will be prepared to increase the pace”. Therefore, the decision will again largely depend on this month’s data. However, most economists believe the employment figures and Consumer Price Index will need to be considerably low to persuade members of the FOMC.
Read the second part of the update by NAGA: The latest report from the US Commodity Futures Trading Commission indicates that investors believe the price of Gold will decline| FXMAG.COM
Blackrock has been the latest investment bank to comment on the Fed’s latest comments. Rick Rieder from the Global Fixed Income Department advises that the high level of employment will likely keep inflation high and warrant a 6% interest rate for the Fed. A 6% interest rate would significantly change the pricing of the Dollar, but more so, the US stock market.
