FED hikes by 25 basis points.

FED Chair Powell yesterday evening announced that the bank would be raising interest rates by 25 basis points as was anticipated. During his speech, FED Powel re-iterated similar remarks made by the ECB that “The U.S. banking system is sound and resilient” to reassure markets for the US banking sector and that the bank will continue with its primary purpose of “maximum employment and inflation at the rate of 2 percent”. We note the change in the tone of Chair Powell’s speech in comparison to the previous interest rate decision, as the statement yesterday seemed to sound dovish, given that the content seemed to signal that a pause of rate hikes nears, while at the same time the bank stressed once again its determination to curb inflationary pressures. Furthermore, during the Q&A session of his press conference, Chairman Powell also stated that the scenario of a “no-hike” was also considered during yesterday’s meeting but given how recent SVB’s collapse was, there was little time to measure its long-term impact in addition to conducting an internal review. Fed Chairman Powell also welcomed an independent review. It’s also characteristic that Fed’s policymakers do not expect the bank to raise rates for the year above 5.25% according to the new dot plot that implies that only one more rate hike could be expected. In addition, Treasury Secretary Yellen testified yesterday before the Senate in which she stated that there would not be blanked coverage of deposits, increasing uncertainty surrounding the banking industry. The highlight of the day though is expected to be the Bank of England’s interest rate decision later today. The market expects the bank to hike rates by 25 basis points. GBP OIS imply a probability of 92% for such a scenario to materialize. It should be noted that the market’s expectations were solidified by the release of UK’s CPI rates for February which unexpectedly accelerated. Indicating that the UK despite having high-interest rates is still experiencing an increase in inflation as such we could see the BoE hike rates in today’s meeting in order to further combat inflation, yet it remains to be seen how hawkish the forward guidance will be. Should the forward guidance be more hawkish than expected we may see the pound getting some support and vice versa. In UK’s fundamentals we note that yesterday the Windsor protocol passed a vote in the House of Commons which was another positive for the sterling as paves the way for improved trading relationships with the EU and solidifies Rishi Sunak in power. In France yesterday President Macron held a televised press conference in which he further re-iterated the need for raising the retirement age despite mass protests and calls for him to fire his Prime Minister, which may allow for the political unrest to be maintained.

GBP/USD is currently in an upwards trend and is currently testing resistance at 1.2340 (R1). As such we hold a bullish outlook for the pair as it moves in a upwards motion validated by the ascending trendline, in addition to the RSI indicator which currently stands at 70. Should the bulls dominate, we may see the pair make a clean break above the 1.2340 (R1) level allowing for a potential test of resistance at 1.2480 (R2). Should the bears take over, we may see a break below the upwards trendline alongside the support at 1.2230 (S1) level and the move closer towards 1.2150 (S2) base.

EUR/USD spiked during yesterday’s trading session maintaining its momentum and is now currently testing resistance at 1.0930 (R1). As such we maintain our Bullish outlook as the pair’s RSI indicator is well above 70. Should the bulls reign we may see the clean break above the 1.0930 (R1) resistance level and the possible testing of the resistance at 1.1050 (R2). However we note the pair is way above the 70 RSI indicator and a correction may be due. In contrast, for a Bearish outlook we would require seeing the break below the upward trendline and the break below the 1.0795 (S1) level and the possible test of the 1.0715(S2) support base.

その他の注目材料

For the European session we anticipate the release of the SNB’s policy rate decision followed by Norway’s policy rate decision. We note BoE’s Kyeis speech and ECB’s Holzman’s speech simultaneously, Turkey’s Interest rate decision followed by the highlight of the day being the UK’s BoE interest rate decision for March. During the American session we take note of the US Initial Jobless Claims for March and New Home Sales for February, in addition to Riksbank’s Theeden’s speech followed by the Eurozone consumer confidence figure for March which coincides with ECB’s Lane’s and BoE’s Mann’s speeches. During the Asian session take note of Australia’s Manufacturing PMI figure for March and Japan’s CPI print for February and Manufacturing index for March.