The Federal Reserve has ended its third round of quantitative easing, opening the door for future rate hikes despite dovish expectations boosting the US dollar and surprising the foreign exchange market.
The US Federal Reserve's Open Market Committee (FOMC) has just concluded its latest monetary policy meeting and the result is the widely expected end of the Fed's bond buying program also dubbed "tapering". The quantitative easing (QE) effort by the U.S. central bank, targeted at keeping long-term interest rates closer to zero.
However, this decision has been widely expected by the markets and the key aspect of the Fed's decision today has been the release of the monetary policy statement which is supposed to shed light on how the FOMC thinks about the future timing of rate hikes.
While there hasn't been any indication about the Fed actually resorting to rate hikes any time soon, the bond markets and the US dollar have interpreted the statement as very hawkish.
The US dollar rose across the board, trading about 0.8% higher against the Euro (1.2645) and the British pound (1.6015), 0.7% higher against the Japanese yen (108.76) with the biggest loser being the New Zealand dollar (0.7839) falling about one percent as of writing.
There have been two sentences in the FOMC's statement which caught the attention of traders. The members of the committee stressed on the labor market recovery saying, "A range of labor market indicators suggests that underutilization of labor resources is gradually diminishing."
On inflation we are reading, "Although inflation in the near term will likely be held down by lower energy prices and other factors, the Committee judges that the likelihood of inflation running persistently below 2 percent has diminished somewhat since early this year."
"Diminishing" Is Key!
The "diminishing" slack in the labor market and likelihood of low inflation continuing was all the US dollar bulls needed to hear. According to the Fed, risks to the opposite side of its dual mandate have been in concert with the labor market recovering faster than expected and inflation likely to rise higher than present levels.
There is no telling what Mr. Market thinks about that for now. We have repeatedly seen foreign Exchange traders overreact to small clues dropped by central bankers, however it appears as if at present, the US dollar's strength has a bit more room to stay as gold lost 1.5% of its value in today's trading so far to trade at $1210.80 as of writing.
Challenges remain going forward however - as the Fed roughly maintains the size of its balance sheet, (which is only partially true, since the central bank will still be reinvesting its proceeds into government bonds) the pressure on asset prices could lead the US central bank to reconsider its intentions to raise interest rates and the US dollar course would reverse.
According to the market for short-term interest rates there is a likelihood of a rate hike by the Fed in September 2015, however we have been here before - only to get another round of QE a couple of months later.
Goldman Sachs announced that it is increasing its short positions in fed-funds futures and the market seems to be playing the same tune this historical evening, when the Federal Reserve announced the end of predetermined bond buying for the third time. How long will it last this time around?
The US Federal Reserve's Open Market Committee (FOMC) has just concluded its latest monetary policy meeting and the result is the widely expected end of the Fed's bond buying program also dubbed "tapering". The quantitative easing (QE) effort by the U.S. central bank, targeted at keeping long-term interest rates closer to zero.
However, this decision has been widely expected by the markets and the key aspect of the Fed's decision today has been the release of the monetary policy statement which is supposed to shed light on how the FOMC thinks about the future timing of rate hikes.
While there hasn't been any indication about the Fed actually resorting to rate hikes any time soon, the bond markets and the US dollar have interpreted the statement as very hawkish.
The US dollar rose across the board, trading about 0.8% higher against the Euro (1.2645) and the British pound (1.6015), 0.7% higher against the Japanese yen (108.76) with the biggest loser being the New Zealand dollar (0.7839) falling about one percent as of writing.
There have been two sentences in the FOMC's statement which caught the attention of traders. The members of the committee stressed on the labor market recovery saying, "A range of labor market indicators suggests that underutilization of labor resources is gradually diminishing."
On inflation we are reading, "Although inflation in the near term will likely be held down by lower energy prices and other factors, the Committee judges that the likelihood of inflation running persistently below 2 percent has diminished somewhat since early this year."
"Diminishing" Is Key!
The "diminishing" slack in the labor market and likelihood of low inflation continuing was all the US dollar bulls needed to hear. According to the Fed, risks to the opposite side of its dual mandate have been in concert with the labor market recovering faster than expected and inflation likely to rise higher than present levels.
There is no telling what Mr. Market thinks about that for now. We have repeatedly seen foreign Exchange traders overreact to small clues dropped by central bankers, however it appears as if at present, the US dollar's strength has a bit more room to stay as gold lost 1.5% of its value in today's trading so far to trade at $1210.80 as of writing.
Challenges remain going forward however - as the Fed roughly maintains the size of its balance sheet, (which is only partially true, since the central bank will still be reinvesting its proceeds into government bonds) the pressure on asset prices could lead the US central bank to reconsider its intentions to raise interest rates and the US dollar course would reverse.
According to the market for short-term interest rates there is a likelihood of a rate hike by the Fed in September 2015, however we have been here before - only to get another round of QE a couple of months later.
Goldman Sachs announced that it is increasing its short positions in fed-funds futures and the market seems to be playing the same tune this historical evening, when the Federal Reserve announced the end of predetermined bond buying for the third time. How long will it last this time around?
Devexperts Checks Off Type 2 SOC 2 Audit for Enhanced Data Security
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/
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Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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