On Thursday, January 27, here is everything you need to know:
Late Wednesday’s hawkish statements by FOMC Chairman Jerome Powell prompted a Dollar surge and significantly impacted key global share indices.
The US Dollar Index (DXY) continued its upward march early Thursday, although markets remained risk-averse ahead of crucial data releases.
The US Bureau of Economic Analysis will announce its preliminary estimate of fourth-quarter gross domestic product growth, while the US Census Bureau will provide durable goods orders data.
The US economic calendar includes weekly initial unemployment statements and pending home sales data.
As predicted, the Fed maintained its current policy settings during its January policy meeting. In response to press queries, FOMC Chairman Jerome Powell stated “quite a bit of flexibility” to raise interest rates without harming the labor market.
Inflation, Dollar Index, And Stocks
Powell said that inflation has accelerated since the meeting in December and restated the committee’s support for raising the policy rate in March “if the conditions are favorable.”
The DXY climbed more than 0.5% on Wednesday, highlighting the favorable impact of Powell’s statements on the policy prospects for the Dollar’s run against its key counterparts.
As of this writing, the DXY was trading at 96.68, its highest level since mid-December, up 0.2% on the day.
Conversely, the benchmark 10-year US Treasury note yield, which had been in the declining stage for the past five trading days, rose by more than 5% on Wednesday and is currently within a striking distance of 1.9%.
The S&P 500 Index ended Wednesday in the red after gaining more than 1% in the first half of the day.
US stock futures are down around 1.1% to 1.6% in the early European period, implying that the Wall Street selloff will almost certainly continue after the opening bell.
Major Currency Pairs And Crypto
EUR/USD experienced significant losses on Wednesday and has been edging down near 1.1200 in the early hours of Thursday.
There will be no high-level data releases from the Eurozone, and the Dollar’s market capitalization will almost certainly continue to dominate the pair’s movement.
The GBP/USD currency pair is moving at its lowest point since the start of the year and is expected to reach 1.3400.
The USD/CAD pair surged above 1.2600 in the early North American session on Wednesday, after the Bank of Canada’s (BOC) decision to maintain its policy rate steady.
Although the pair gave up its gains during Bank of Canada Governor Tiff Macklem’s news conference, when she stated they would need to hike rates to combat inflation, it regained positive momentum and soared over 1.2700.
Gold suffered its worst one-day decline since November, falling more than 1.5% as US Treasury bond rates continued to rise. XAU/USD is reaching a major support point at $1,800, and if that value fails to hold, further technical selling pressure might be seen.
USD/JPY gained roughly 100 pips on Wednesday as US rates rose and appeared to have entered a consolidation period below 115.00 on Thursday morning.
Bitcoin surged in response to the Fed’s policy announcement but failed to maintain its rebound pace. BTC is trading at $36,000 in the early European session, down roughly 2% on the day.
At $2,400, Ethereum is down over 2% on the day, having closed flat the previous two days.
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