BoE in focus after hawkish Fed

Frank Walbaum

Important news this week

Thu, 30th Jul, 13:00 CET UK BoE Interest Rate Decision.
Thu, 30th Jul, 14:30 CET US PCE Price Index.
Fri, 31st Jul, tentative JP BoJ Interest Rate Decision.

Hawkish Fed shakes markets despite a softer Dollar

Markets reacted cautiously following the latest FOMC meeting. While the US Dollar weakened after the announcement, the Federal Reserve maintained a hawkish stance, stressing that inflation remains too high and that interest rates may need to stay restrictive for longer. Policymakers continued to emphasize their data-dependent approach, signalling that easing policy is not imminent despite signs of moderating economic growth.
Equity markets sold off as investors reassessed the outlook for higher borrowing costs and tighter financial conditions. Most major FX pairs strengthened against the weaker Dollar, although the Australian Dollar underperformed as fading risk sentiment weighed on commodity-linked currencies. Gold and Silver also lost ground, with broad risk-off flows encouraging investors to reduce exposure across several asset classes despite the softer Dollar. Meanwhile, oil prices continued to move higher, supported by persistent geopolitical tensions and expectations that supply risks could remain elevated.

Market talk

Today's focus shifts to the Bank of England's interest rate decision, where markets widely expect rates to remain unchanged. While the decision itself is unlikely to surprise, traders will closely monitor the BoE's statement and Governor Bailey's comments for clues on inflation, wage growth, and the timing of future policy changes. Following the hawkish Fed, any indication that the BoE also intends to keep rates higher for longer could provide additional support for Sterling. Investors will continue to monitor incoming inflation and labor market data, while oil prices and geopolitical developments remain key drivers of overall market sentiment.

Tendencies in the markets

Equities weaker, USD weak, crypto sideways, oil stronger, Silver weak, Gold weak.

Author

Frank Walbaum

AUD/USD jumps to 0.7050, fresh one-month top after hot Australian CPI

AUD/USD attracts buyers for the second straight day on Wednesday, rising to a fresh high since September 23 during the Asian session. A hot Australian CPI print reaffirmed bets for an imminent RBA rate hike in November and boosted the Australian Dollar. Meanwhile, the US Dollar pauses after a three-day rally to a near two-week high ahead of the crucial FOMC rate decision, lending additional support to the currency pair.

USD/JPY sticks to modest gains above 157.50 as traders await Fed, BoJ meetings

USD/JPY attracts buyers for the third straight day, recovering further from a one-month low ahead of Wednesday’s FOMC decision and the BoJ policy update on Friday. Meanwhile, expectations that the BoJ may hold off on aggressive rate hikes weigh on the Japanese Yen, and the US Dollar advances to a nearly two-week high, supporting the currency pair.

Gold comes under pressure, still above $4,000 ahead of FOMC

Gold now gives away part of its recent two-day rebound, although a breach below the key $4,000 mark per troy ounce remains elusive for now. Rising crude oil prices keep the precious metal under pressure ahead of the Fed’s interest rate decision later on Wednesday.

Bitcoin Price Forecast: BTC reclaims $81,000 as traders await Fed policy decision, Big Tech earnings

Bitcoin (BTC) reclaimed $81,000 on Wednesday, extending its recovery as investors wait for the Federal Reserve (Fed) monetary policy decision and upcoming Big Tech earnings. Institutional demand showed mild bullish signs, with spot Bitcoin Exchange Traded Funds (ETFs) recording a second consecutive day of inflows this week.

Federal Reserve set to hold interest rates steady despite persistent inflation

The US Fed announces its Interest Rate Decision on Wednesday, following another pivotal meeting that could provide key insights into the bank’s monetary policy outlook heading into the end of the year.

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