Fed messaging leaves something for everyone | FX Research

The FED decision has come and gone, and in the end, no major surprises. As expected, the central bank left rates on hold, with most of the market reaction coming from the Fed chair presser.

Jerome Powell gave something to everyone, leaving the net results rather balanced. On one side, he said the central bank was in no rush to cut rates, fueling hawkish sentiment and US dollar buying. On the other, he noted that rates remained meaningfully above the neutral rate, suggesting more rate cuts could be in the pipeline, leading to some offsetting dollar selling.

On politics, Powell, as expected, avoided commenting on the new administration’s policies, deferring instead to a wait-and-see approach and data dependency.

The market appears to be giving a slight edge to the doves, reflected in the overall risk-on reaction and higher US equities.

Earlier today in Australia, NAB adjusted its call for the RBA to cut rates in February instead of March, citing softer inflation data. In New Zealand, business confidence slumped.

Key events ahead on Thursday’s calendar include German import prices, German GDP, BoE consumer credit, UK mortgage approvals, Eurozone GDP, Eurozone unemployment, Eurozone sentiment data, the ECB policy decision, US GDP, initial jobless claims, and pending home sales.

Exclusive FX research from LMAX Group Market Strategist, Joel Kruger