Featured # Markets | 4 years ago

Federal Reserve Announcement Strengthens USD

The USD climbed to nearly its highest weekly level in a month as investors reconsidered the future movements for interest rates in the United States following a string of Federal Reserve policymakers made declarations regarding interest rates rising by a quarter point two more times throughout the year. The hopefulness that suggests the expectations for economic growth, combined with optimistic outlook surveys on Tuesday and a favorable response to Credit Suisse’s decision to cut costs all aided European shares rising into the black.

On the other hand, the price of oil fell about 1% lower as the looming possibility of a strengthening dollar and climbing rates from the Fed combined to halt a five-day run of gains for shares within emerging markets. In addition, U.S. futures’ movements points to Wall Street opening slowly. Officials from BNP Paribas in France shared their views recently on how the decisions of the Fed have and will continue to impact market movement, “Market pricing for Fed tightening continues to tentatively rebuild. Our expectation, however, is that the risk environment will ultimately be unable to sustain pricing for a series of Fed tightenings.”

A week ago the Federal Reserve reduced the amount of interest rate increases it plans to execute throughout the rest of the year, which lowered the likelihood that there will be any rate movements in the coming Fed meetings to be held in April and June. However, on Monday and Tuesday numerous policymakers assured the masses that the Fed still expects to raise rates this year despite the anxiety that has constrained the markets throughout the beginning of the year.

The President of the Chicago Fed, Charles Evans, indicated that market pricing for only one more interest rate increase is not on par with what one of the most apathetic advocates of constrictive policy believes to be fitting. The USD rose roughly one quarter of one percent against a multitude of currencies that are utilized to measure its extensive fortitude, and rose more than half of one percent against currencies that are heavily tied to commodities such as the New Zealand dollar, the Australian dollar, the South African rand, and the Norwegian crown.


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