The green bank outperformed in overnight trade, rising against its major counterparts amid building Fed rate hike speculation, the upcoming FOMC meeting later today is the next critical point for major currency. Rhetoric suggesting that the markets are underestimating the US central bank’s determination to raise rates again in the near term as well as the extent of tightening on tap this year is likely to encourage continued gains for the greenback. It may likewise trigger risk aversion, threatening to deliver outsized losses to the sentiment-linked Australian, Canadian and New Zealand Dollars.
Yesterday’s oversold rally was eradicated within 24 hours as the S&P 500 fell 0.94% and the NASDAQ 1.25%. Indexes were in the red but not that heavily before the afternoon when some waves of selling hit the market. Even with the slightest hint a rise in interest rates may come in play in the future, traders became upset and sold stocks.
European markets opened lower on Wednesday, amid higher trade in the oil price, as comments from U.S. Federal Reserve officials suggested a rate hike could come sooner than expected.
Key Market data Wednesday – May 18th:
08:30 – GBP: Average Earnings Index + Bonus.
08:30 – GBP: Claimant Count Change.
09:00 – EUR: CPI.
14:30 – USD: Crude Oil Inventories.
18:00 – USD: FOMC Meeting Minutes.