Banking-related headlines dominated news coverage on the same day as the Federal Reserve (Fed) increased interest rates and hinted at a potential pause.
The Senior Loan Officer Opinion Survey on Bank Lending Practices, which will be used for the upcoming FOMC meeting, will be made public by the central bank the following week.
Fed: Banking Sector Concerns
The paper discusses modifications to the criteria and conditions of bank lending as well as the situation of corporate and consumer loan demand—all critical factors in the current context with the Fed tightening monetary policy and banking sector worries.
The US Consumer Price Index (CPI) on Wednesday and the Producer Price Index (PPI) on Thursday will be the two most important data next week.
These figures will influence market expectations for interest rates and will be very important for the future movement of the US dollar and Treasury bond yields.
As the US 2-year yield closed lower than 4.0%, the US 10-year yield momentarily hit a three-week low before rising to 3.45%. The yield on bonds is still within its recent range.
Although the overall trend is still bearish, the continued ambiguity around the US debt ceiling may cause market volatility to rise.
The US Dollar Index, however, completed the week at a one-year low despite maintaining its position above the critical support level of 101.00.
The US Federal Reserve convened yesterday and unanimously decided to raise interest rates by 0.25% to 5.25%, the highest level in recent years.
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NFP Forecast Revised Upward, ISM Services PMI as Expected
While the Fed is adopting a rhetorically more hawkish stance and not completely ruling out another rate hike next month, it has also removed language from its statement that had implied further rate hikes, giving the market more confidence that this will be the final hike in the current tightening cycle.
In addition, Powell said that he does not anticipate a recession and that the status of the US financial industry has improved.
Following the announcement, stock markets barely changed, while the US dollar fell.
The US dollar is once again declining on the Forex market in keeping with its long-term bearish trend.
The US Dollar is unquestionably the weakest currency, and the Australian Dollar is displaying the strongest short-term strength, drawing attention to the aud/usd currency pair.
While both the eur/usd and gbp/usd currency pairings are currently testing long-term highs, trend traders may also be looking for long bets in these currency pairs as the long-term negative trend in the US Dollar continues to be in force.
WTI crude oil saw a sharp decline due to recession and demand worries, hitting a new 14-month low below $64 before experiencing a sharp rebound during the Asian session as risk sentiment recovered globally.
In the majority, stock markets have increased throughout the Asian session.
ADP’s projection for non-farm payrolls predicts a substantially stronger NFP print than was anticipated: 296k versus 148k.
Data from the US ISM Services PMI were almost exactly as anticipated.
Today, data on US unemployment will be released.
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