Things to watch out for on Thursday, February 2:
The US dollar plunged after the US Federal Reserve’s monetary policy decision. The central bank decided to raise its reference rate by 25 basis points (bp), as expected by market agents. The statement showed that policy makers changed the wording on inflation, noting that it “has moderated a bit but remains elevated,” though there were no other relevant changes in the document. In addition, he noted that the Committee believes that “continued increases in the target range will be appropriate” to bring inflation back to 2%, hinting at more rate hikes on the agenda.
US Fed Chairman Jerome Powell, began his statement by repeating that the Fed is firmly committed to reaching its 2% inflation target. He also repeated that job growth has been strong and the unemployment rate has remained low. However, he added later that, for the first time, “we can declare that a deflationary process has started.” As for the right level of tightening, Powell said a couple more rate hikes are needed to reach it. Finally, he ended by admitting that Rate cuts could happen this year “if inflation falls much faster.” Following the event, the US Fed Terminal Rate fell below 4.9%, while the Late-2023 Fed Funds Rate fell below 4.4%, as markets continue to price rate cuts. rates for this year.
According to first estimates, European inflation fell more than expected in January. The Harmonized Index of Consumer Prices (HICP) rose at an annualized rate of 8.6%. The news helped EUR/USD break above the 1.0900 threshold before the US Federal Reserve announcement, and the pair ended the American session near a multi-month high of 1.1000 afterwards. The European Central Bankwill announce its monetary policy decision on Thursday.
The GBP/USD pair struggled throughout the day to extend its gains beyond 1.2300 as investors await the decision of the bank of england monetary policy decision. The Bank of England is expected to raise rates another 50 basis points, while markets will look for clues on a pace of tightening from March. The US currency stood at 1.2370, rising thanks to the general weakness of the dollar.
Commodity currencies benefited from Wall Street’s positive tone, with AUD/USD hovering around 0.7140 and USD/CAD dipping as low as 1.3280. Finally, the USD/JPY is trading around 128.90.
Cashthe Gold skyrocketed and is currently around $1,950 a troy ounce.
Crude oil prices fell at the start of the OPEC+ meeting, with no changes in production on the agenda. Rising US inventories, reported by the EIA, also weighed on crude prices, as US stocks rose by 4.14 million in the week ending January 27. At the moment, WTI is trading around $76.90 a barrel.
The Fed maintains its hard line with a rise of 25 basis points, how will the price of Bitcoin react?
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Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
