Markets are gradually stabilizing, despite the fact that Russia-Ukraine tensions remain high. The two-day FOMC meeting concludes this afternoon.
FOMC meeting ends today
The Fed is widely expected to keep a hawkish stance as it prepares the market for a rate lift-off on March 15-16. This year’s three quarterly rate increases have already been factored into the market. In the absence of any new macro projections or Dot Plots, we expect Fed Chair Powell to make a very clear message that the Fed is looking beyond recent stock market volatility and is instead focused on the tight labor market.
The resurgent pandemic is likely to have both slowed economic growth in 2021 and kept key inflation indicators well above the Fed’s 2% target, according to newly revealed data expected later this week.
US stock index futures rose on Wednesday after two days of turbulence following Microsoft’s excellent earnings, while investors awaited the outcome of the Federal Reserve’s policy meeting. Tesla will release its earnings today after market close.
FX news
In the FX, the US dollar index is showing some minor gains around 96.00, while dollar/yen is edging notable higher after the flat Tuesday session. Euro/dollar is still pointing down below 1.1300, approaching yesterday’s lows, while sterling is climbing above $1.3500 today.
BoC decision on the calendar
Additionally, the Bank of Canada meets today. The BoC is expected to maintain a hawkish stance, and it may alter its forward guidance to prepare markets for a potential lift-off sooner rather than later. Currently, the BoC has designated Q2 as a possible launch window. Recent Canadian data, on the other hand, have been good, prompting markets to revise up the anticipated timeline. March 2 is completely priced in as well. Dollar/loonie dived below 1.2600 with immediate support at the 200-day simple moving average (SMA) around 1.2500.
In other currencies, aussie/dollar is rising near 0.7170; however, kiwi/dollar is having weak momentum today, standing around 0.6700.
WTI crude oil futures are hovering near the seven-year high of $85.54/per barrel, suggesting a strong positive day, while gold prices are looking steady at $1,845/per ounce.
