Today’s Federal Reserve (Fed) Decision, And The Market After Riksbank Shocked
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Risk appetite is poor into today’s Federal Reserve (Fed) decision, and after Riksbank shocked the market with a 100bp hike yesterday. The announcement couldn’t get the SEK appreciate against the US dollar; it rather got many investors more uncomfortable, and worried that the Fed would do the same today: deliver a 100bp hike.
But it may not.
The expectation for the decision
Activity on Fed funds futures still assesses less than 20% probability for a 100bp hike from the Fed today. So, the expectation is that the Fed will deliver a 75bp hike today. We could see a relief rally in equity and bond markets, if, of course, the dot plot doesn’t show projections going above market expectations.
One good news in all this is that inflation in Canada eased more than expected last month, both the headline and the core inflation softened. But the data obviously revived the BoC doves and sent the Loonie lower against a broadly stronger US dollar. The USDCAD spiked to 1.3375 as a result. And cheaper oil didn’t help.
The market is under pressure
Crude oil fell below $85 per barrel, as the US announced it would sell 10 million barrels more from the Strategic Reserves for delivery in November to help keeping a negative pressure on oil prices.
The EURUSD consolidates below parity, as Cable slipped below 1.14 mark. Bitcoin is testing the $19K support this morning and gold remains under a decent selling pressure due to strong dollar and rising US yields.
Watch the full episode to find out more!
- 0:00 Intro
- 0:27 Riksbank raised by 100bp
- 1:16 Could the Fed do the same?
- 3:12 Market update
- 4:15 Betting against treasuries is fructuous, but risky
- 6:28 Oil down as US announced more strategic reserve sale
- 7:25 EUR, GBP, Gold and Bitcoin under pressure into Fed decision
Ipek Ozkardeskaya
Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020.
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