Daily Market Roundup: Unwind from Federal Reserve meeting; EUR/USD: History could take time to repeat itself

Nick Batsford, CEO of Tip TV, was alongside Zak Mir, technical analyst for Zak’s Traders Café, and Bill Hubard, Chief Economist for Bullion Capital, when he opened the Tip TV Finance Show to discuss the aftermath of the Fed rate hike, as well as the outlook on the EUR/USD.

Fed finally raises interest rates

Mir began by noting that after all the faffing around, it was fairly easy for the US central bank to raise interest rates, and markets have risen like a home-sick angel off the back of the announcement. Hubard outlined the Fed trajectory, where Yellen was on the hawkish side when revealing the dot plot, however, he believed that 3 rate hikes, one in March and December, is more likely that the 4 rate hikes expected.

EUR/USD: History could take time to repeat itself

Batsford highlighted FX Street, who commented that a 25-bps hike was expected, whilst the 4 rate hikes signalled for 2016 was rather unexpected. In terms of the EUR/USD, the pair rallied (2 out of 3 times) in last Fed tightening cycles after the first rate hike was initiated. However, history may take time to repeat itself as the FOMC surprised with a hawkish DOT chart. They concluded that the EUR/USD could head towards 1.0748.

Hawkish DOT unexpected

Batsford moved onto Elliott, who expressed that all twelve voting members of the US FOMC decided that a 25 basis point rise from the current target rate at 25 basis points was in order. At her press conference Fed chair Janet Yellen noted that, ‘the committee judges that there has been considerable improvement in labour market conditions this year, and it is reasonably confident that inflation will rise, over the medium term, to its two per cent objective. Economic conditions will evolve in a manner that will warrant only gradual increases’.