Hawkish FED surprising but not helpful for USD

Welcome to the post-FOMC Thursday where things are clearing up! FED did not surprise by the rise and hiked rates by 50bp, lifting rates to the highest levels in 15 years. It was not a shocker but Jerome Powell and FOMC still managed to surprise by being more hawkish than expected, also claiming no cuts in 2023. Furthermore, they say inflation is to stay high and even exceeding the desired level despite its recent cooling down. By the way, who else remembers that not so long ago, Jerome Powell was claiming this inflation was just transitory? Fun times.

Ahead of FOMC, the Dollar was weakening. The first reaction after the statement was, of course, positive for the USD but, later on, the price reversed again. The dollar index finished lower despite the hawkishness. The strongest currencies among the majors were GBP and EUR. USD is climbing higher today but this rise is pretty mild. The weakest currency right now is the Australian Dollar, which is pretty odd considering the better-than-expected data from the Australian job market published a few hours ago. A closer look at the calendar explains this occurrence, though, as we also received a pack of data from China that were largely disappointing. Industrial production and retail sales came lower than expected and lower than the previous month.

Oil enjoyed the ride yesterday and made the third bullish day in a row. The rest of the commodities were not as successful and most of them finished on the red side of the market. Today, negative sentiment on commodities persists, especially on metals, where almost all of them are currently dropping.

Indices reacted negatively. This comes in line with my yesterday’s analysis where I discussed the SP500 with a very promising bearish setup on the chart. Short-term indices remain bearish. Recent rises were stretched and FOMC gave a good argument for a correction, which really should not surprise anyone, not even orthodox buyers.

Today’s calendar is busy, too. We shall observe three rate decisions in Europe: Switzerland, the EU, and the UK. Analysts are expecting a 50bp rise in all of them. We will also receive important data from the US, where we will find out retail sales supposedly coming lower than the previous month.