The FED left rates unchanged as expected and removed language talking about potentially raising rates – also fully expected.
The hawkish twist came from a comment on waiting to be more confident about falling inflation. That sent the USD up, risk assets down.
Then came Powell with a dovish comment – he signaled the Fed only needs a continuation of data, not another big fall in inflation. That sent the US Dollar down.
He then made a blunt hawkish twist – saying a March rate cut is unlikely, and not the base case. That triggered a wild reaction in favor of the Greenback and against everything else.
He then calmed down by saying it all depends on the economy – data-dependent.
All in all, the USD ends the day higher, stocks lower, Gold lower.
But, it's not over. I still expect markets to look at the data, and if it shows a continuation of slowing inflation a cooling labor market – Nonfarm Payrolls are coming on Friday – everything will change.
The hawkish twist came from a comment on waiting to be more confident about falling inflation. That sent the USD up, risk assets down.
Then came Powell with a dovish comment – he signaled the Fed only needs a continuation of data, not another big fall in inflation. That sent the US Dollar down.
He then made a blunt hawkish twist – saying a March rate cut is unlikely, and not the base case. That triggered a wild reaction in favor of the Greenback and against everything else.
He then calmed down by saying it all depends on the economy – data-dependent.
All in all, the USD ends the day higher, stocks lower, Gold lower.
But, it's not over. I still expect markets to look at the data, and if it shows a continuation of slowing inflation a cooling labor market – Nonfarm Payrolls are coming on Friday – everything will change.
