News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bullish
Oil - US Crude
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
GBP/USD
Bullish
USD/JPY
Mixed
More View more
Real Time News
  • Trading bias allows traders to make informative decisions when dealing in the market. This relates to both novice and experienced traders alike. Start learning how you may be able to make more informed decisions here: https://t.co/rz7fqhRoMG https://t.co/e4G1gTGhex
  • Greed is a natural human emotion that affects individuals to varying degrees. Unfortunately, when viewed in the context of trading, greed has proven to be a hindrance more often than it has assisted traders. Learn how to control greed in trading here: https://t.co/kODPAfJE79 https://t.co/pS48NIuwqX
  • Forex liquidity makes it easy for traders to sell and buy currencies without delay, and also creates tight spreads for favorable quotes. Low costs and large scope to various markets make it the most frequently traded market in the world. Learn more here: https://t.co/arxYmtQeUn https://t.co/gFVVZTGbe1
  • Forex quotes reflect the price of different currencies at any point in time. Since a trader’s profit or loss is determined by movements in price, it is essential to develop a sound understanding of how to read currency pairs. Learn how to read quotes here: https://t.co/CNtqrKWDBY https://t.co/nHXiNJhLes
  • A currency carry trade involves borrowing a low-yielding currency in order to buy a higher yielding currency in an attempt to profit from the interest rate differential. Find out if the carry trade suits your trading style here: https://t.co/7t4BzmLg8w https://t.co/h0TmJcZeqr
  • $USDCAD sold off aggressively last week, putting it into position to test the important 2017 low; trading bias is neutral to bearish. Get your market update from @PaulRobinsonFX here: https://t.co/sphxUAW9TB https://t.co/ZhsTeJOOM8
  • Get your snapshot update of the of top level exchanges and key index performance from around the globe here: https://t.co/d8Re5anlG5 https://t.co/qP96xmgDVn
  • The pro-risk Australian Dollar may extend gains after the record miss in US jobs data, amplifying dovish rhetoric from the Federal Reserve and keeping the Dow Jones and S&P 500 intact. Get your market update from @ddubrovskyFX here: https://t.co/yf8mPX3O3W https://t.co/uCCmjaxUhF
  • Who else is keeping close tabs on Dogecoin $DOGE this weekend? All eyes on Elon Musk @elonmusk, the proverbial 'Dogefather,' and his Saturday Night Live @nbcsnl performance kicking off at 11:30PM ET. The #crypto is already looking nice and perky following that trendline break! https://t.co/nrQsnlUqWj https://t.co/4lOz6NLQTG
  • There is some very interesting event risk over the opening half of this coming week of trade. It starts with Elon Musk hosting SNL tonight for Dogecoin traders and moves into US inflation data to as means to stir the ongoing Fed debate and Dollar https://www.dailyfx.com/forex/video/daily_news_report/2021/05/08/Dollar-Tumbles-Dow-Hits-Record-Highs-and-Dogecoin-Traders-Tune-In.html https://t.co/LXhjv7ToWC
US Dollar Recovers as FOMC Hikes by 25-bps, Signals More to Come (at a Slower Pace)

US Dollar Recovers as FOMC Hikes by 25-bps, Signals More to Come (at a Slower Pace)

Christopher Vecchio, CFA, Senior Strategist

Talking Points:

- FOMC raises benchmark interest rate to range of 2.25-2.50%, as was expected by markets.

- New dot plot suggests that two hikes could come in 2019, down from three; however, rates markets had been pricing in just one ahead of time. After the FOMC meeting, June 2019 was still eyed for a hike.

- Given FOMC staying a bit more hawkish than market pricing, the US Dollar has been able to recover some ground versus the other majors; however, is only back to breakeven on the day.

Looking to learn more about how central banks impact FX markets? Check out the DailyFX Trading Guides.

US financial markets have seen a wave of volatility in the wake of the Federal Reserve’s December policy meeting. The Federal Open Market Committee raised its main rate by 25-bps to a range of 2.25-2.50%, as was widely expected (72% probability according to Fed funds futures), but made a number of tweaks to its GDP and inflation forecasts, and thus, to its glide path of interest rates (known as the “dot plot”) moving forward.

Overall, the FOMC saw the median Fed funds rate at 2.4% at the end of 2018, no change given that this was the last meeting of the year. However, they saw the median Fed funds rate at 2.9% at the end of 2019, down from 3.1% in September 2018. The median Fed funds rate for the end of 2020 was dropped to 3.1% from 3.4%. Finally, the longer run expected rate was forecasted at 2.8% from 3.0%.

Here are the Fed’s new forecasts:

US Dollar Recovers as FOMC Hikes by 25-bps, Signals More to Come (at a Slower Pace)US Dollar Recovers as FOMC Hikes by 25-bps, Signals More to Come (at a Slower Pace)

Here is the Fed’s new dot plot:

US Dollar Recovers as FOMC Hikes by 25-bps, Signals More to Come (at a Slower Pace)

See the DailyFX economic calendar for Wednesday, December 19, 2018

The result from the Fed seems to be an attempt to thread the needle for a dovish rate hike today, but it may not have worked. While the Fed cut its expectation for rate hikes in 2019 from three to two, this was still slightly richer than what rates market were pricing in ahead of time, which was only for one rate hike.

Perhaps most notable was the commentary by Fed Chair Jerome Powell at his press conference regarding the range of estimates for the economy moving forward. While Chair Powell stressed that his views are increasingly dependent on data, he noted that the dispersion of estimates among FOMC members had increased; in other words, the Fed’s confidence in its own forecast was decreasing (less dispersion means more unanimity in views).

DXY Index Price Chart: 5-minute Timeframe (December 19, 2018 Intraday) (Chart 1)

US Dollar Recovers as FOMC Hikes by 25-bps, Signals More to Come (at a Slower Pace)

Immediately following the data, the US Dollar jumped higher versus the Euro and the Japanese Yen, with the Dollar Index (DXY) rallying from 96.62 ahead of the FOMC decision to as highas 97.07. The DXY Index was trading at 97.00 at the time this report was written, held back by what was a significant move in US Treasury yields:

US Treasury 10-year Yield Chart: Hourly Timeframe (December 2018) (Chart 2)

US Dollar Recovers as FOMC Hikes by 25-bps, Signals More to Come (at a Slower Pace)

There is an argument to be made that the sharp drop in US Treasury yields – the 10-year is down to fresh December lows and its lowest level since May 30 – is not due to the change in perception around the Fed, but rather a ‘risk-off’ move brewing in US equity markets. For the US Dollar, its rise today on the heels of a drop in yields and stocks does not necessarily bode well for the future.

S&P 500 Price Chart: 1-minute Timeframe (December 19, 2018 Intraday) (Chart 3)

US Dollar Recovers as FOMC Hikes by 25-bps, Signals More to Come (at a Slower Pace)

Read more: US Dollar Awaits Results of December FOMC Meeting

FX TRADING RESOURCES

Whether you are a new or experienced trader, DailyFX has multiple resources available to help you: an indicator for monitoring trader sentiment; quarterly trading forecasts; analytical and educational webinars held daily; trading guides to help you improve trading performance, and even one for those who are new to FX trading.

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher, email him at cvecchio@dailyfx.com

Follow him in the DailyFX Real Time News feed and Twitter at @CVecchioFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES