Yesterday’s Federal Reserve (Fed) decision was relatively hawkish - depending on where you are coming from (I am coming from a bank crisis).

The Fed raised the rates by 25bp, as broadly priced in, but Fed Chair Jerome Powell signaled that there would be another 25bp hike on the wire before this tightening cycle ends. QT and dot plot were unchanged.

Stocks fell, while Treasuries rallied as a sign that not everybody interpreted the Fed decision equally dovish, or hawkish.

US futures are in the positive at the time of recording. It is well possible that the post-FOMC equity selloff quickly reverses, at the falling yields is supportive of equity valuations – if financial stress is contained and economic data is not too bad.

In the FX, the dollar’s sharp fall led to a strong rally in the EURUSD yesterday.

Cable rallied as well, after the latest inflation report fueled the bets that the Bank of England (BoE) has no choice but to hike its policy rate at today’s MPC meeting.

This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.

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