Markets React to the US Federal Reserve Downplaying Rate Cuts [Video]
US bourses dipped on Tuesday, on sharp declines in tech shares, after comments from top Federal Reserve downplayed a potential rate cut next month. Asian markets are also headed for a mostly bearish close on Wednesday morning while EU bourses started the day in the red.
Big Roaring Bears Ahead?
A number of economic indicators are showing further contraction and heightened global tensions are casting their shadow on risk markets. Bullard, who has thus far been the most dovish Fed speaker, made it clear yesterday that he is not going to vote for a 50bps cut in July dampening the markets rate cut expectations. Therefore, the one small hope of a Fed easing cycle which could help boost the markets in now gone and we could soon be entering a long-term bear market. After all, there are a multitude of recession signs according to the latest data out of the US which all points to a contracting economy while the only hope lies with a Fed easing cycle according to BCA research.
Forex Preview: Dollar Set for More Gains
The USD recovered some of its previous losses after a very dovish Fed meeting last week caused a massive selloff for the greenback. The dollar could now find its bottom and possibly correct to the upside after a number of Fed speakers dimmed expectations of a rate cut at the next monetary meeting. The EUR/USD is presently at its 200-day MA at 1.1360 while the GBP remains too fragile to respond to the dollar correction and has already recorded losses with the GBP/USD last seen trading 0.24 percent lower at 1.2666 as of 7:45 GMT. We would expect more losses for the sterling throughout the day.
Oil Prices Skyrocket
Elsewhere, oil prices advanced by 2% this morning despite a stronger greenback after data showed U.S. crude stockpiles fell more than expected. Specifically, crude WTI futures were last seen trading 1.8% higher at $58.88, while Brent futures were last at $65.11, or 1.3% higher as of 7:55 GMT.
Bitcoin, Neo and OmiseGo Lead Major Crypto Rally
Bitcoin massively skyrocketed overnight testing the $12,800 level hitting fresh year-to-date highs to last trade at $12,480.0 as of 8:00 GMT. After this more than impressive run in the recent weeks, one needs to consider strong corrections could happen to this most volatile asset. That said, the upward momentum is clearly intact. Other major cryptocurrencies also recorded major gains today, with NEO and OmiseGO adding more than 10% this morning. NEO in particular has doubled in value in less than a week.
Gold Retreats
A stronger greenback weighed on the dollar-denominated noble metal and caused it to slide from its six-year peak hit on Tuesday. Given the overall landscape of things, dips in Gold continue to look interesting to buyers.
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