22 Mar: Fed hike, as expected; increase 2019 dot-plot to 3. US$ lower! Australian Jobs data, BOE Meeting ahead today.

By | March 22, 2018

 

The Fed, meeting for the first time under Chairman Jerome Powell have hiked rates by 0.25% from 1.5% to 1.75% and forecast a steeper path of hikes in 2019 and 2020, citing the improving economic outlook for doing so. At the same time the board continued to project a total of three increases this year, signalling growing confidence that US tax cuts and government spending will boost the economy and inflation and lead to more aggressive future tightening. The statement also said that inflation, on an annual basis, is “expected to move up in coming months,” after previously saying “move up this year” and that price gains are still expected to stabilise around the Fed’s 2% target over the medium term. The markets then traded in highly volatile price action, but contained within a range ahead of Jerome Powell’s press conference. The press conference saw no real directional move although the US$ remained under some pressure heading into the NY close, ending towards session lows against most pairs and came about despite US bond yields trading higher, with the 10 Year trading up to 2.937% before closing nearer 2.90%.  Although yields were firm today, the overall yield curve remains flat and this is weighing on the dollar. The US$ weakness possibly came about because Donald Trump will likely announce tariffs on Chinese imports on Friday, with the potential implications of some form of trade war. Earlier in the day, Cable was underpinned by solid jobs data, coming ahead of today’s BOE Meeting. Stocks were also volatile but without travelling too far in either direction, while the commodities rallies quite hard, with the metals up by around 1.55% and WTI up by 2.7%, underpinned by an unexpected inventory drawdown. Inventories of US crude fell by 2.622 million barrels for the week ended March 16, confounding expectations for a rise of 2.6 million barrels.

Following on from the FOMC, Asia has got off to a busy start, with the RBNZ leaving rates unchanged, as expected, with little follow-through on any directional move in the Kiwi. Next cab off the rank will be the Australian Unemployment data for February (exp 5.5%, +20K) followed closely by the Japan Nikkei Flash Mfg PMI and the All Industry Activity Index.  Europe will be busy, with the Flash Manufacturing/Services/Composite PMIs, the German IFO Business Climate/Expectations the EU Current Account and Economic Bulletin, while the UK gets the BOE Meeting/Statement/Minutes/Vote Count/APP Facility and the February Retail Sales.  The US will also have the Markit Manufacturing/Services/Composite PMIs flash PMIs, as well as the January House Price Index and the Kansas Fed Mfg Activity Index. Have a good day.

CURRENCIES
EURUSD: 1.2343
Res  1.2360  1.2385  1.2415
Sup  1.2320  1.2300  1.2270
USDJPY: 105.95
Res  106.15  106.30  106.50
Sup  105.80  105.60  105.45
GBPUSD: 1.4148
Res  1.4150  1.4180  1.4200
Sup  1.4100  1.4080  1.4045
USDCHF: 0.9490
Res  0.9510  0.9540  0.9570
Sup  0.9480  0.9450  0.9420
AUDUSD: 0.7767
Res  0.7800  0.7780  0.7825
Sup  0.7740  0.7720  0.7700
NZDUSD: 0.7235
Res  0.7245  0.7260  0.7280
Sup  0.7220  0.7200  0.7175
INDICES / COMMODITIES
S&P: 2718
Res  2745  2770  2800
Sup  2700  2680  2660
DJI: 24726
Res  24800  24895  24995
Sup  24660  24605  24465
ASX SPI: 5926
Res  5940  5955  5970
Sup  5915  5905  5890
XAUUSD: 1333
Res  1335  1340  1345
Sup  1325  1320  1315
XAGUSD: 16.58
Res  16.65  16.75  16.85
Sup  16.50  16.40  16.30
WTI: 65.48
Res  66.00  66.60  67.00
Sup  64.90  64.30  63.55