It was anticipated that the Federal Open Market Committee (FOMC) would make a rate adjustment during their meeting, and there was a slight indication that it would be a 25-basis point increase. The probability of the move being around 75% does not reflect in the interest rate of the market. Investors are questioning whether the Fed will stay in its keen direction to fight against inflation or halt the interest rate hikes because of the recent bank rescues and bankruptcy among banks.
On Wednesday, the U.S. dollar was down near 5-week lows ahead of the verdict of the U.S. Federal Reserve’s policy meeting. Investors are still waiting on clarity on the route the Central Bank is most likely to take in the path of global banking turmoil. The U.S. dollar index that measures the currency against six other peers was at 103.22, above the 5-week low of 102.99 stirred overnight. Euro was at $1.0767, approaching a five-week high of $1.0789 overnight.
Markets are now trading in about a 14% odd of the Fed not rising rates and an 86% odd of a 25 basis point hike. In the previous month, the market price was in a 24% probability of a 50-basis point hike.
Due to the volatile market state following the United State’s banking failures and the rescue of Credit Suisse, investors worry about the state of the banking sector.
According to Catril, the Fed has faced a hard choice given a firm labor market alongside the inflation in February, leading to higher figures than the expectations of the market watcher. This action usually leads to the return of a 50-basis point hike in order not to worry about financial stability.
Other Trade Market Analysis
- Yen declined 0.04% to 132.59 per dollar
- The Australian dollar increased by 0.04% to $0.667
- Sterling was trading up 0.06% at $1.2221
- The New Zealand dollar declined y 0.16% to $0.618
In cryptocurrencies:
- Bitcoin last decreased by 0.14% to $28,114.13
- Ethereum last dropped by 0.47% to $1,793.72
The Treasury Secretary has reassured depositors in the United State Bank that insurance would be appointed if small institutions are in trouble with deposits.
The DXY index has been declining, and the support might be at a decrease of 102.64 and 102.59 since the collapse of SVB financial. And it is still descending.
