Making a start with the Federal Reserve’s rate decision yesterday, the central bank decided to kept rates intact as widely expected at the 4.25%-4.5% for the fourth straight meeting and the policymakers dot plot graph showcased projections that only two rate reductions will follow in 2025.
The board remains still concerned about the impact of tariff and taxation policies of the US administration hence the prolongment of the running the wait and see approach appears to be the most appropriate way of dealing with these uncertainties. The greenback found slight support post the decision, whereas US equity indices finished the session flat, as investors brace for new data.
Moving away from the US, travelling east across the Atlantic towards the UK, we now switch our attention towards the Bank of England’s rate decision for June, where traders anticipate a pause at the 4.25% level. Inflation in the UK stood at 3.4% in May, above the bank’s 2% target, validating the base case scenario and BoE policymakers will most likely bring to the forefront the impending tariff impact as another factor guarding them from reducing rates in the immediate futures. Money market forecasts, however, expect to see two rate reductions from the central bank in 2025.
Moving further east towards central Europe, earlier today we also saw the Swiss National Bank slashing 25bps off its key borrowing rate, dragging it down to 0%, amid easing inflationary pressures and a weaker economic outlook.
Finally traveling north, a surprise came from the Norway’s central bank, the Norgesbank, which in surprise move decided to lower its policy rate by 25bps to the 4.25% and caught market participants off guard. The Norwegian Krone devaluated sharply by 1% against the Euro as a result, opening up the door for further weakness in the foreseeable future should the ECB keep its respective rate intact for the upcoming meetings.
Technical Analysis
EURNOK Chart – The Norwegian Krone devalues sharply after surprise cut from Norgesbank, possible shift in trend eyed
Resistance: 11.60 (R1), 11.70 (R2), 11.80 (R3)
Support: 11.50 (S1), 11.40 (S2), 11.30 (S3)