Spreadex Market Update
Will They Won’t They? March FOMC On Watch Today
Equities Firmly Higher Yesterday – Uncertainty Remains Ahead of Fed
Equities indices staged a recovery yesterday as the US Dollar weakened. Traders appear to think today’s FOMC meeting will err on the more reserved (less hawkish) side. Additionally, actions and reassurances from central banks this week over the ongoing banking sector liquidity trouble has helped underpin risk sentiment allowing for a move higher in equities. However, today’s FOMC meeting presents clear two-way risk and should the Fed be seen sticking to its guns, hiking by 25 bps and signalling further tightening to come, this might see markets come under heavy selling pressure.
GBP Rallies on Unexpected Inflation Jump
GBP has taken the lead across G10 FX on Wednesday. The latest UK inflation data this morning came out unexpectedly strong at 10.4% vs 10.1% prior and 9.9% expected. Traders had been mulling the prospect of a pause from the BOE tomorrow in line with falling inflation and the current banking troubles facing markets. However, with prices moving higher once again, there is clearly a need for the BOE to continue with tightening near-term.
Gold Pulls Back, Crude Recovering
In the metals and commodities space, gold and silver prices were seen reversing sharply lower yesterday as equities rebounded. With gold prices having broken out to fresh YTD highs yesterday, today’s FOMC meeting will be make or break for metals. Crude prices were seen rebounding yesterday amidst the broader pickup in risk appetite. All eyes are firmly on the Fed today with USD action likely to dictate crude direction into the weekend. EIA also on watch with a further 1.7 million barrel drawdown forecast today.
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