In a unanimous vote, the Fed kept interest rates unchanged at 5.25-5.50%. The statement had only minor revisions from the July meeting. Most FOMC members suggested in their estimates that another rate hike could be appropriate before the end of the year. During the press conference, Fed Chair Powell clarified that the “dot plot” is not a plan.
NBC analysts said that as expected, the FOMC is attempting to keep the possibility of a final hike before the end of the year is over. While the anticipated near-term terminal rate is unlikely to change from June, the eventual predicted rate of easing has been altered and pushed back.
The Fed meeting’s influence will be seen again later today, when more US data is due, including weekly jobless claims, the Philadelphia Fed, and existing home sales. The likelihood of a US government shutdown is growing. To avert a government shutdown in October, legislation must be passed before the end of the week.
US Treasury yields increased, with the 10-year yield reaching 4.40%, the most since 2007, and the 2-year yield reaching 5.17%, the highest since 2006. Higher yields bolstered the US currency. Stocks on Wall Street failed to hold their gains and closed down. The Dow Jones fell 0.22%, while the Nasdaq fell 1.53%. Following the FOMC September meeting, the US Dollar Index surged from 104.60 to test previous highs around 105.40. The main resistance level for the DXY is 105.50.
The EUR/USD currency pair abruptly changed direction from 1.0730 and fell to 1.0650, showing that the bearish trend is still in place. The September preliminary Consumer Confidence Index for the Eurozone is expected on Thursday. The PMIs on Friday are the most important economic data of the week.
The Bank of England’s decision was impacted by the unexpectedly negative UK inflation statistics. A rate hike was anticipated before the release of the data, but subsequently, the odds became more evenly split, favouring a halt. The BoE will make its judgment public on Thursday, which is expected to cause volatility. The Monetary Policy Committee’s conclusion and vote will be extensively examined by market participants. Following the release of the data, GBP/USD hit a low of 1.2331 before bouncing back to 1.2420 and then reversing course to hit new lows of 1.2330.
When USD/JPY was trading above 148.00 early on Wednesday, Japanese authorities intervened verbally. The pair subsequently began to retrace its steps before rising to 148.30 after the Fed meeting. Intervention might occur if the pair continues to move above 148.50.
Despite reaching its best daily close since late May, the USD/CHF rate is still below 0.9000. On today, the Swiss National Bank will announce its decision, which is anticipated to be a rate increase of 25 basis points to 2%.
NZD/USD surged to its highest level in two weeks at 0.5985 before losing all of those gains and closing just marginally above the 20-day Simple Moving Average (SMA) at 0.5930. On Thursday, New Zealand will release data on credit card spending and Q2 GDP growth. Due to a strong USD currency and the worsening state of the market, AUD/USD once again failed to hold above 0.6500 and fell below 0.6450.
Please note that this article does not offer any instructions or suggestions regarding investment decisions. It is important for you to conduct your own research or seek professional advice from a qualified professional before conducting an investment decision.