The Federal Reserve exerted a hawkish pause by skipping a rate hike but raising the terminal rate to 5.6% from 5.1%. That implies 50 more basis points hikes between now and the end of the year.
The market which was thinking in terms of no change and the potential for no change in July, is now thinking they got that idea wrong. Looking at the markets:
- USDJPY : The USDJPY moved back above its 100 and 200-hour moving averages (between 139.52 and 139.62) and extended toward the high swing area between 140.22 and 140.44. The high price reached 140.167 and backed off. He currently is trading at 139.95.
Price before decision: 139.39
- GBPUSD: THe GBPUSD move to a low of 1.2626. The high price yesterday reached 1.26238. Moving below that level and then the 1.26000 level would be the next key targets, followed by the rising 100 hour moving average 1.2575.
Price before decision: 1.2683
- USDCAD: The USDCAD has moved back above its 100-hour moving average at 1.3336. Recall from yesterday – and on Monday – the price moved above that moving average level, but could not sustain momentum to the 200-hour moving average (green line in the chart below). The 200-hour moving average currently comes in at 1.3371. The current price trades at 1.3340 just above the 100-hour moving average. Can the price hold support against the 100-hour moving average?
- AUDUSD: The AUDUSD tumbled lower after the hawkish pause by the Fed. The move to the downside erased all the gains for the day, and retested its rising 100 hour moving average of 0.67535 (blue line in the chart below). The price has bounced back up to currently traded 0.6775.
The US stocks have moved lower:
- Dow industrial average is trading down -385.0 or -1.13% at 33825. Change before decision was -154 point
- S&P index is down -25.15 points or -0.57 percent at 4343.88. Change before decision was +6.4 basis points
- NASDAQ index is down -87 points or -0.65% at 13485.54. Change before decision was up 19.33 points
in the US debt market yields the yield curve flattened as short-term rates both higher while longer term rates move lower.
- 2-year yield 4.753% +5.8 basis points. Yield before decision 4.62%.
- 10-year yield 3.827% -1.2 basis points. Yield before decision 3.778%
- 30-year yield 3.894% -4.7 basis points. Yield before decision 3.88%
Is the Fed intent on breaking the economy?
This article was originally published by Forexlive.com. Read the original article here.