Fed delivered a “dovish hike” – Danske Bank

According to analysts at Danske Bank, the Fed delivered a “dovish hike” by maintaining the rate hike signal at two additional hikes this year (although it was close to being revised up to one more hike, supporting the view that risk is probably skewed towards a total of four hikes this year) while raising the 2019 median dot from slightly more than two hikes to three hikes.

Key Quotes

“As markets had speculated about the signal being revised up for this year, we have seen the EUR/USD moved higher and US Treasury yields moved lower after the meeting. Asian equities are more mixed as the boost from the ‘dovish’ Fed hike is mitigated by concerns about new US trade actions.”

“This concern comes after the media yesterday reported that Trump might already announce new tariffs targeted China today (was not expected until tomorrow). The stories suggest Trump will impose tariffs on goods imported from China for a value of USD50bn but that the administration will try to limit the impact on US consumers. US Trade Representative Robert Lighthizer also threatened China with retaliation against any Chinese retaliation measures, especially on agricultural products. In the same interview, he said that the US trade deficit with the EU is a big problem.”