All Eyes on the Fed: Dollar Steady, Aussie Rallies on Hot Inflation

Hello traders, and welcome to Wednesday, one of the most important trading days of the week — and perhaps of the month — with a heavy calendar and market-moving events packed into the day. The action already started during the Asian session with inflation data from Australia, which came in higher than expected, providing a strong boost for the Australian dollar. That early momentum sets the tone for what will likely be a volatile day across all asset classes as traders brace for multiple interest rate decisions and major corporate earnings.

The market’s attention now turns toward two key monetary policy decisions. First, we’ll get the interest rate decision from Canada, where the Bank of Canada is expected to cut rates by 25 basis points, signaling a more dovish stance amid slowing economic conditions. However, the main event of the day will undoubtedly be the Federal Reserve’s interest rate decision, expected to deliver a 25 basis point cut as well, bringing rates down from 4.25% to 4.00%. The decision will be accompanied by the FOMC statement and a press conference, which should offer clues on whether this cut marks the beginning of a longer easing cycle or a one-time adjustment. Traders can expect high volatility on the dollar, indices, and commodities once the announcement hits the wires.

In parallel, today also brings a massive earnings lineup, particularly in the technology sector. Microsoft, Alphabet, and Meta Platforms will all report after the market close, marking one of the most anticipated earnings sessions of the quarter. The results from these tech giants could heavily influence market sentiment going into Thursday. Yesterday’s earnings were dominated by Visa and Booking Holdings, which both reported better-than-expected results. 

Turning to the market landscape, indices are climbing higher, continuing the optimistic tone we’ve seen throughout the week. The currency market reflects this “risk-on” sentiment — the Australian and New Zealand dollars are leading the pack, followed by the Canadian dollar, all gaining on improved risk appetite. Meanwhile, the euro and U.S. dollar are largely flat, and the British pound remains the weakest major currency.

On the commodities front, metals are staging a rebound, led by silver, which is showing stronger momentum after days of correction. Gold is also attempting to stabilize after its recent decline. Oil, however, remains under pressure, moving sideways but holding in a three-day bearish correction.

To sum up, Wednesday is set to be packed with action — a day dominated by central bank policy and corporate heavyweights. Traders should brace for heightened volatility as markets digest both the Federal Reserve’s tone and the earnings from Silicon Valley’s biggest names.

Source: https://www.axiory.com/analytics/market-news/all-eyes-on-the-fed-dollar-steady-aussie-rallies-o