USD Weaker after Rate Hike
The Fed have just hiked rates for the 3rd since the financial crisis. However, we they have also failed to give upgrades to economic projections and this sent sentiments south as the market perceived the whole thing as a less hawkish view. We could also view the sell off in the US dollars as a “Buy the rumor and Sell the news” trade as traders locked in their profits once the Fed raised hikes.
Nevertheless going forward we should pay more attention to what the Fed officials say and this Thursday Yellen at her press conference will have a chance at adding more clarity to the whole situation and hence provide traders with some bearing on what they should do with the US dollars.
We should not however lose sight of the fact that the Fed is on a clear and steady path for higher interest rates and at the same time we see a clear monetary policy divergence between the Fed and the other central banks. While the Fed is clearly tightening, the other banks are still in easing mode. We could see the other central banks following the Fed but at the moment we see the Fed clearly leading everyone else in implementing a tighter monetary policy.
Not much on the Economic Calendar Today
We have the Japan on Bank holiday today and not much earth shattering news on the calendar today.
Bank of England Surprise Boost to the GBP
On the 21st of March, the monthly inflation data for the UK will be released. The Bank of England have decided to keep rates at 0.25% but what surprised the market was that the minutes from the policy meeting showed that members were discussing the possibility of increasing interest rates, especially if inflation figures continue to rise. As such, figures coming out this week will be closely watched and any figure that shows that inflation is creeping in might bolster the Pound bulls.
EURUSD Benefits from US Dollar Weakness
Euro benefited from the sell off in the US dollars last week and propelled EURUSD towards resistance level situated at the 1.08 level. The pair still moves with a trading range and any downside may be supported at the 1.05 support level. At the time of writing, EURUSD is at 1.0753.
Many still question the sustainability of the rally in the EURUSD and we believe that only a break above the 1.0830 level on a daily closing basis will give the Euro Dollar bulls more reasons to push it higher.
USDJPY Reeling from US Dollar Weakness
USDJPY is currently trading at 112.60 zone and is not moving much in Asian session as the pair tries to stabilize from the weakness in the US dollars after the rate hike was announced.
XAUUSD Gained 2.29% Last Week
Currently trading at 12325 level in early Asian session, the yellow metal benefited from the retreat in the US dollars. It recorded the biggest weekly gain since February and continues to stay elevated in early Asian session. Gold’s immediate resistance is at 1233.45 which happens to be a 10 day high and the next topside resistance is at 1248. Support levels can be seen at 1224 and 1213 next.
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