As expected, the FED came through with their plan to up the overnight borrowing rates to 1% from the previous 0.75%. While this was nothing out of the ordinary, the USD price went down sharply after the announcement. The USD Dollar Index – a measurement of the strength of the American currency versus a basket of other foreign currencies went down shortly after the news broke out. It now stands at 100.09, a decrease of 1.33% from previous levels. The Dollar has also lost value against the Euro (-1.22%), Yen (-0.95%) and the Loonie (-0.98%). At the same time the gold went up 2.1% against the Greenback. A few reasons could be pointed out, such as a lack of change in rate projections, no change in the near future economic outlook, as well as an increase in the price of the corresponding currencies themselves. By current projections, 2 more rate hikes are to be made this year and it remains to be seen if the measures can reassure the market that the taken steps are the correct ones or if the USD will continue to fall.
FOMC meeting around the corner, traders eager for any signals
A rate hike by the FED is all but certain. The writing seems to be on the wall as the current 0.75% rate will not be enough to help the US keep up with the curve. The increase is expected at 0.25%, bringing the short-term borrowing rate to 1%.
Yuan tumbles further down, Draghi and the ECB decide on the future EUR rate
Chinese trade balance data has missed widely as expectations for February were a net positive for the export section with a surplus of 173B Yuan. Rather than an increase, changes were a negative 60B. The release data showed disappointing results for the second largest economy with exports only 4.2% on a yearly basis versus the expected 14.6%. Imports have increased with 44.7% on a yearly basis when only 23.1% was the expected level for this report. Despite this, the net result is still a surplus of 293.7bn CNY for the economy on a yearly basis thus far.
AUD stays predictable, FED and ECB cannot promise the same
As expected, Governor Lowe reaffirmed that the interest rate for the Australian Dollar will remain at 1.5% for now. The cited reasons are the promising economic outlook with low inflation, but still sluggish employment rate. Consumer and business confidence have grown with exports being high and mining investments picking up again. The labor and housing markets were the only concerns at the meeting.
Bulls in charge of Stocks, but for how long?
President Trump made his speech to congress and while it was rich in words, it did not give as much detail regarding his policies, as some might have hoped for.
His talk centered on immigration issues, city crime and drug abuse, with recurring themes of deregulation, big infrastructure projects like the Dakota pipeline and attacks on the The Trans-Pacific Partnership (TPP) treaty.