Kantox currency update: dollar weakens despite Fed’s rate hike
The dollar dropped across the board on Wednesday after the Fed released the first interest rate hike of the Trump era. The bank, however, disappointed the market, that expected signals towards a faster monetary tightening calendar for this year, and reacted selling the greenback.
Furthermore, the euro was favoured by the outcome of the Dutch elections where Geert Wilders’ Eurosceptic party obtained a worse than expected result, which has eased concerns about a “Nexit” which might put the EU in serious trouble.
EUR/USD returns above 1.0700. The euro bounced up at 1.0600 on Wednesday and accelerated its recovery following the Fed monetary policy decision and the first results of Dutch elections to reach 5-week highs at 1.0740. At London market opening times, the EUR/USD is trading at 1.0725.
GBP/USD jumps to 1.2300. The pound extended its recovery from Tuesday’s lows at 1.2100 on Wednesday, favoured by broad-based dollar weakness, to test near-term highs at 1.2300 ahead of the BoE monetary policy decision. At London market opening times, the GBP/USD is trading at 1.2275.
USD/JPY plunges to 113.00 after Fed decision. After having remained practically flat at 115.00 area for two days, the dollar dropped about 1.25% immediately after the Fed monetary policy meeting, to hit fresh two-week lows right below 113.00. At London market opening times, the USD/JPY is trading at 113.25.
In the Calendar Today
At 12:00 GMT investors will be attentive to the BoE’s monetary policy decision. With the UK Government about to trigger the Article 50, the bank is widely expected to leave rates unchanged at least until the Brexit outcome clarifies. The interest of the event will be in the meeting’s minutes to know the committee member’s views on the UK economy and the pound.
12:00 GMT BoE: Interest Rate Decision
Prev: 0.25% Cons: 0.25%
12:00 GMT BoE: MPC Minutes