The BoE And The ECB Raised Rate By 0.50% To 3.50% Today, Australian Dollar Falls After Disappointing Data From China
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Post-Fed volatility risk is not over yet. All eyes are on the ECB's approach to quantitative monetary tightening and economic updates from the BoE.
The US Federal Reserve has also delivered a 50bps interest rate hike, pushing borrowing costs to the highest level since 2007 and hinting at a rate peak of 5.1% next year, above previous projections
The Federal Reserve's decision was as provocative as expected for policy decisions - at least in relation to market expectations. The observation of volatility from risk assets and the dollar was noticeably more limited than one might expect
Despite Chairman Powell's hawkish tone, the US dollar fell to a new low. The dollar has since fallen to a new five-month low.
EUR/USD
The EUR/USD Pair is trading soft on the session and drops just before the ECB meeting. The euro fell 0.67% to $1.0611
The European Central Bank was set to raise interest rates for the fourth time in a row, although by less than at its last two meetings. The decision was as expected, ie a 50bp hike.
Thus, interest rates in the euro zone reached the level of 2.50%
Supply chain crisis in the Eurozone economy have not calmed yet as war tensions between Russia and Ukraine are still solid. This is expected to keep Eurozone inflation expectations solid ahead. The European Central Bank expects the inflation rate to remain above 2% for the next three years. This will force the president of the European Central Bank, Christine Lagarde, to further tighten interest rate policy in order to tame rampant inflation.
GBP/USD
There is an interest rate decision by the Bank of England, and the big fear is the same as the ECB's: recession fears that could stop the Central Bank from raising interest rates further next year. This could result in discrepancies in interest rate expectations between the US and the UK.
The Bank of England (BoE) has raised interest rates for the 9th consecutive meeting as the UK central bank continues to battle with inflation. The BoE raised the bank rate by 0.50% to 3.50% today
After the expected half-point increase by the Bank of England, the British pound continued to fall.
Read next: Given the peculiarities of the US labor market and the high labor mobility, the acceptable unemployment rate is considered to be 5.0%| FXMAG.COM
AUD/USD
The Australian dollar weakens slightly following disappointing rounds of key Chinese economic data. The Australian dollar is moving within a bearish trend
China's slowdown has negative consequences for Australia.
China is Australia's largest trading partner. Thus, economic performance in the former often has knock-on effects on the latter. If this is the case, a slowdown in China could hurt Australian production in the future, perhaps inspiring the Reserve Bank of Australia to change its policy course
USD/JPY
USD/JPY Pair rose to 136.6907 from 135.4721 getting a lift from the Fed decision.
The Japan trade deficit narrowed modestly in November according to data released overnight, with brisk growth for both imports and exports.
Source: finance.yahoo.com, investing.com
