Forex Today: Yields, jobless claims and BOE eyed after the Fed fires up stocks, gold
|Here is what you need to know on Thursday, March 18:
Stocks and gold are cheering the dovish Fed decision while the dollar is on the back foot despite high US yields. The BOE is set to leave its policy unchanged and may express optimism, and US jobless claims are eyed. The EU-UK vaccine spat amid AstraZeneca's issues are also in the spotlight.
Dovish: Only four out of 17 Federal Reserve members agreed with the markets' view of a rate hike coming in 2022 and only seven in 2023. While Fed Chair Jerome Powell attempted to dismiss the forecasts in the dot-plot, he stressed that the bank will only act after it sees progress – rather than try to stay ahead of the curve.
The Fed's dovish message sent the S&P 500 to new highs and gold to around $1,750. The US dollar dropped across the board, shrugging off high ten-year yields – the global benchmark is around 1.68% at the time of writing, close the cycle high.
- Powell and the FOMC: Is it really about the Fed Funds Rate?
- Fed Analysis: Dovish dots down dollar, why this may be a buy opportunity
Markets will continue digesting the Fed decision but will also watch weekly jobless claims for the week of March 12, when Nonfarm Payrolls surveys are conducted. A small drop is on the cards.
See Initial Jobless Claims Preview: Improvement is relative
The Bank of England is set to leave its policy unchanged and comment on recent UK developments and potentially hint on future policy. Minutes from the meeting may acknowledge the recent improvement and lean toward allowing UK yields to rise.
Bank of England Preview: Green light to gains? Three ways the BOE can boost the pound
The yen strengthened after Nikkei reported that the Bank of Japan may expand the yield band, allowing returns on ten-year bonds to rise. The BOJ is scheduled to announce its decision early on Friday.
BoJ Preview: Policy review to focus on yield curve control framework and ETF-buying
The EU/UK row over vaccines has been intensifying. European Commission President Ursula von der Leyen has threatened to block exports of doses to the UK if it does not get enough supplies. In the meantime, a slowdown in Britain's immunization campaign is expected due to a shortage in inbound coming vaccines.
The European Medicines Agency is set to announce its verdict on the safety of AstraZeneca's jabs on Thursday, following suspensions related to suspected blood clots.
AUD/USD has jumped above 0.78, benefiting from the dovish Fed decision and also by robust Australian employment statistics. The land down under reported an increase of 88,700 jobs and a sharp drop in the unemployment rate to 5.8%.
Bitcoin has been edging higher, changing hands near $59,000, hile Ethereum and XRP have also been advancing above previous levels.
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