The US-dollar eased lower after Fed Chair Powell’s comments in his accompanying statement, to the committee’s decision to raise rates to the 5.25-5.50% range, 25bp. Powell says the Central Bank will continue to decide policy on a meeting by meeting case and upcoming data will inform decisions. He also noted that either a hike or steady policy will be the tone for the September meeting. So pretty much the same message as the last meeting. The AUDUSD has clawed back some of its intraday losses resulting from a surprise drop in inflation data which would assume the RBA has room to pause next week. Some economists, however, still note that the inflation rate is well above the central bank’s target and looking for them to keep policy tight for one more hike if they are to curb the consumer pressure. Also helping the AUDUSD has been the murmurs from China to increase support for their economy, since it is one Australia’s leading trade partners. For today, traders will look to any retreat to find first support at 0.6725, while resistance at 0.68-cents continues with further supply at the 0.6840/50 level behind. The ECB Meeting tonight will be the key event for markets today.
Wall Street finished a mixed trading session after the Fed raised interest rates by a much expected 25bp and the risk market responded to Powell’s comments as a dovish outlook, saying further policy was data dependent at future meetings. The DJI was up 0.25%, the S&P500 closed flat and the Nasdaq closed lower, shedding 0.1% for the session. Australian shares look to open flat today, as investors digest yesterday’s inflation dent and the overnight move by the Fed to raise rates once again.
Gold prices moved higher, as the US-dollar and US Treasury yields eased and investors contemplated Fed Chairman Powell’s latest comments.
Copper prices have eased today, as traders fail to see any follow through on Beijing promises to support their economic recovery. Iron Ore prices traded higher for the day, as traders welcomed China’s pledge for more stimulus to support their struggling economy, though concerns about overall steel demand has been capping gains.
Brent Crude Oil prices dropped 1% following US crude inventories falling less than expected and the move by the US Fed to raise rates by another 25bp that could hinder demand outlook.