USD Sells Off Against All Majors after the Fed Hikes Rates As Expected

Mar. 15, 2017 (Tempus, Inc.) – As anticipated, the Federal Open Markets Committee raised rates by 25bps today, but the USD came under pressure due to the lack of clear guidance by the U.S. central bank on the amount of future rates hikes for the rest of the year.

Today’s economic data met expectations as Consumer Price Index and Retail Sales expanded by 0.1% each.

Markets rose overnight, helping some resource-based currencies that had been sliding for days. Oil prices declining hurt the commercial value of other commodities, but a report of lower than estimated inventories of shale oil in the U.S. put a stop to the bleeding. The neighboring CAD and MXN are improving as well as the oceanic NZD and AUD.

 

EUR

Despite of today’s post-Fed announcement rally, the EUR, a currency chained by the shackles of political uncertainty, will likely trade around current ranges until we get a clearer picture of results in the Netherlands and in France. Twenty eight parties are on the race for power so a coalition is expected to form in order to have a government.

Geert Welders, the rightist politician who could shake things up in regards to trade and immigration, has lost some steam recently and his Freedom Party members may not be able to gain much support from other parties unless their numbers are impressive. A lot is up in the air, but all we can do now is to wait for the chips to fall.

 

GBP

The Pound erased some of its early week losses because it seems not a majority of Scots are feeling the whole separation from the UK as much as their fearless leader. Although Nicola Sturgeon diligently started the legal process to establish a referendum asking Scotland if it wants to be independent, a few polls showed that 57.0% of those surveyed would like to stay British.

It seems like Euro-skepticism is not just a far-right phenomenon, but a growing sentiment amongst many across the continent that the Union may no longer be the best system for economic or social cooperation between nations. GBP is still on an almost 4.0% slide since the start of February. The instability will keep downward pressure on the “quid.”

 


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