Fed Holds Rates, Yet Projections Show Hike Expected Now Before End 2026; Stocks Lower, US Dollar Higher; Risk-On Sentiment Generally Prevails; Markets Await Bank of England and Swiss National Bank Policy Meetings
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Kevin Warsh'd first Fed meeting takes a minor hawkish tilt, impact US stock markets and the US Dollar.
The major news item today is yesterday's meeting of the US Federal Reserve, which was Kevin Warsh's first as Chair. The Fed voted to leave its interest rate unchanged at 3.75%, but the projections took a hawkish tilt as the "dot plot" now expects one rate hike late in 2026. Warsh also stripped out much of the usual forward guidance. The news sent stocks lower and the US Dollar higher, but recent hours are seeing a retracement against these moves which have resulted in much of the price changes being given back.
Risk-on sentiment remains. We have just seen the Japanese Nikkei 225 Index and the KOSPI Composite rise on the day to close at new record highs. trend traders will want to be involved here on the long side.
There will be policy meetings today at the Bank of England and at the Swiss National Bank. Neither Bank is expected to make any changes to its interest rate, even though UK CPI (inflation) came in a bit lower than expected yesterday, unchanged at an annualized rate of 2.8%.
New Zealand GDP data and UK unemployment claims were as expected.
Crude Oil remains weak, with WTI again reaching a new 3-month low price, trading below $75 with lowering momentum. The falling price of crude oil is giving a tailwind to improving risk-on sentiment.
Precious metals like Gold and Silver are holding up but doing little. Note how Gold remains within its descending price channel. I don't think bulls should get excited here just yet.
Bitcoin is falling against after failing to get established above $67,500 following its recovery from support near the round number at $60,000.
In the Forex market, the USD/JPY currency pair finally broke out to make a new multi-year high price - trend traders will still be long of it, with the price getting a boost from the Fed last night. It is still holding up despite the Yen's gains. However, volatility is low here, and bullish momentum quite slight.