Barring surprises, the focus will be on Powell's tone. The market is trying to gauge whether he foreshadows an endpoint for hikes in the near future, as well as whether he pushes back on market pricing for rate cuts beginning as soon as the second half of this year.
"The market is anticipating some pushback from Powell, although it's difficult to pin down how much is enough to convince the market," said Brian Daingerfield, head of G10 currency strategy at NatWest Markets. "Anything short of Powell going 10 for 10 hawkish may ultimately be seen as being not hawkish enough. Conversely, the market may take even the smallest dovish concession and run with it."
Currency trade has been in a holding pattern ahead of the Fed and Bank of England and European Central Bank meetings that follow on Thursday. But the U.S. wages data wiped out some small dollar gains made earlier this week amid some nerves that the Fed sticks to its hawkish stance. The dollar dropped for a fourth straight month in January, and lost 1.5% on the euro and 0.8% on the yen . Both pairs were steady in early Asia trade, with the euro at $1.0860 and the dollar buying 129.91 yen.U.S. treasuries were cautiously firmer in Asia, with benchmark 10-year yields down 2 bps to 3.5105%. S&P 500 futures fell 0.3%.
Can’t believe anyone believe the Fed will announce the end of rates rising tomorrow…. Fed has been extremely clear rates rising will continue long enough till it became evident inflation is well tamed around 2%… won’t happen before 2024 Enjoy rates rising for the next year
Dude the dollar is literally always worth exactly one dollar it can’t go up or down it’s like a stable coin but better….
25 Basis Points.
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