FOREX
The US dollar touched a fresh seven week low during early Thursday trading, as the markets price-in downgraded expectations over the pace and scope of the Federal Reserve’s rate hiking cycle. The dollar weakness occurs even as the Fed chose not to hold back, sticking to the previously telegraphed intention of increasing interest rates by a quarter of one percent. What changed was the tone used for the announcement, which was more dovish than on previous occasions. The turbulence currently experienced by the banking sector is directly linked to the steepest increase in interest rates in decades, and the change to a more dovish posture by the Fed precisely reflects that. The main takeaway from yesterday was that the last thing the FOMC wants is to escalate the bank sector crisis, and risk destabilizing the financial system, even if the fight against inflation becomes harder.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
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