The Fed’s decision to keep interest rates unchanged and comments suggesting that rates cuts are not as imminent as the market has expected have helped the FTSE and European markets into a much stronger position Thursday. The DAX gained close to 0.9% helped also by a rally in Asia while the FTSE made a more modest gain of 0.30% led by miners, industrials and airlines.
Dollar in decline as Trump ponders Powell’s removal
The dollar had already started sliding after the Fed’s rate decision Wednesday but reports that President Trump is considering removing Fed chairman Jay Powell have put the greenback under yet more pressure. This has worked in favour of the pound which has been on the back foot for weeks, helping sterling rally back above $1.27.
The BoE session today is also playing a role in the pound’s recovery as the central bank is expected to hold rates steady but reinforce its message that it will raise them later this year. Although the UK economy has practically ground to a halt the argument for higher rates is supported by a very fast growth in wages.
Brent crude is trading back above $63 ahead of OPEC’s meeting in Vienna at the beginning of July. Member countries are working towards extending the oil output cuts that are currently in place despite signs that the US market is well stocked.