Fed’s interest rate decision could shake the markets today, with investors focused on whether the Fed will maintain rates or hint at future policy changes. Forward guidance, the new dot plot, and Chairman Powell’s press conference will be closely watched amid inflation and employment concerns.
Fed expected to remain on hold, but…
Market focus today is expected to be placed on the Fed’s interest rate decision. Fed Fund Futures imply that the market widely expects the bank to remain on hold, which is our expectation as well. Emphasis is expected to be placed on the Fed’s forward guidance in an effort to understand its intentions. Especially the accompanying statement, the new dot plot and Fed Chairman Powell’s press conference are to be closely watched. We expect the bank to sound probably more hawkish as worries for inflationary pressures in the US economy are present. On the flip side, the easing in the US employment market advises cautiousness and a looser monetary policy.
Xcellence Research Team opinion
Should the bank sound more hawkish we may see the USD getting some support. On the contrary a more dovish approach by the Fed could weigh on the greenback considerably.
Volatility of oil prices eases
Volatility of oil prices tended to ease in today’s Asian and European sessions. Developments of the US war in Iran continue to be the fundamental issue tantalising oil traders and no end seems to be in sight. We expect further escalation of the war currently, which could enhance market worries for the supply of oil. Yet the recent announcement that Iraq is to restart oil exports, through Turkey’s Ceyhan port, tended to ease the market worries somewhat.
Xlence Research Team opinion
Should we see market worries for the supply side of the oil market being enhanced, we may see oil prices being pushed even higher. On the other hand, should market worries tend to ease further, we may see oil prices lowering.
US equities rise
US equities were on the rise yesterday and during today’s Asian and European sessions. Overall there seems to be a slight improvement of the market sentiment which allows for a more risk-on approach of the markets. On the other hand we expect the Fed’s interest rate decision to have ripple effects beyond the FX market and shake also US equity markets later today.
Xlence Research Team opinion
Further improvement of the market sentiment could provide some support for US equities. On the flip side should the Fed’s interest rate decision sound more hawkish than what the markets may be expecting we may see US equities retreating.
Bitcoin bulls hesitate
Bitcoin’s price was on the rise yesterday, setting new highs for March, implying a more risk-on approach by the markets. Yet during today’s late European session, Bitcoin’s price was on the retreat surrendering all the gains made since the start of the week. We maintain the view that the market sentiment is a key issue for Bitcoin’s direction, given its riskier nature. Hence, we highlight the Fed’s interest rate decision later today as a possible catalyst.
Xlence Research Team opinion
Should the market sentiment turn more cautious, especially if the Fed sounds more hawkish than expected, we may see Bitcoin’s price rolling down. On the flip side, should the market sentiment improve, we may see crypto bulls pushing Bitcoin’s price higher.
Disclaimer: This information is not considered investment advice or an investment recommendation, but instead a marketing communication.
