Forex News for 24 March 2023

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March 24, 2023
  • At the second meeting in a row, the US Federal Reserve increased interest rates by 0.25% in an effort to lower rising inflation. The benchmark rate is at its highest level since 2007 at 4.75 to 5% right now.
  • The Federal Open Market Committee (FOMC) is still dedicated to lowering inflation, despite the notion that the aggressive rate-raising strategy has contributed to the stress in the financial system.
  • The U.K. GfK consumer confidence index for March rose to -36 from -38, slightly below the estimated figure of -35. Despite this, the increase is a positive sign of recovery from the record-low levels, fueled by improvements in measures of personal financial situation and general economic situation.
  • In March, the Japanese flash manufacturing PMI rose to 48.6 from 47.7, indicating a slower rate of contraction than the estimated figure of 48.2. This was due to a surge in output, which increased at its quickest pace in nine months.
  • According to the CME FedWatch Tool, a majority of the respondents (86.4%) believed that there would be a 0.25% rate hike. However, more than half of them (56%) thought that the rate hike cycle would come to a pause after the upcoming FOMC meeting on May 2nd to 3rd, suggesting that the last rate hike may have already taken place in the current tightening cycle in the USA.
  • In its recent statement, the FOMC reiterated its objective to bring down inflation to its 2% target and suggested that the rate rise cycle may continue to achieve it.
  • US annualised inflation dropped from a record of 9.1% in June to 6% in the year ending in February, marking the ninth month in a row that prices have declined. On the other hand, monthly inflation increased by 0.4%.
  • The US Dollar Index closed the day with a 0.62% drop, indicating that the market sentiment was leaning towards the unlikelihood of further rate hikes.
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