Rate hike sparks stock market frenzy, dollar drop is digging another hole

Market Trends Morning Report

The Federal Reserve (FOMC) raised the federal benchmark interest rate by 25 basis points, and various markets quickly digested the impact of the news, and the foreign exchange market is currently not much affected. The dollar fell back again to close down to 98.02 points, down to -0.37%. The euro continued to rally higher up to 1.1091 points, up 0.53%. USD/JPY started to move higher sideways and closed at 118.62 pips, down -0.13%. USD/CAD continued to retreat plunging to close at 1.2625 pips, down -0.43%. GBP/USD surged higher and retreated to close higher at 1.3152 pips, up 0.04%. AUD/USD continued to surge higher closing at 0.7378 points, up 1.22%. The USD/CNY offshore exchange rate bottomed out and rebounded to close at 6.3674 points, up 0.03%. The overall trend of the foreign exchange market, the Federal Reserve announced a 25 basis point rate hike was considered by the market as a successful rate hike, the dollar index continued to fall, the rate hike may not stimulate the exchange rate higher a scene again. Non-U.S. currencies have rebounded higher, the Australian dollar pressured the yen rose the most, and the unilateral continued to rise continue to pay attention.

Basic analysis of the currency market

The following factors influenced the foreign exchange market. First, the U.S. announced the annualized monthly rate of new housing starts in February at 6.8%, higher than the market expectation of 3.8% and the previous value of -4.1% performance; the total annualized number of new housing starts in February was 1.769 million, higher than the market expectation of 1.7 million and the previous value of 1.638 million. U.S. initial jobless claims for the week ended March 12 were 214,000, lower than market expectations of 220,000 and the previous value of 227,000; the monthly rate of U.S. construction permits in February was -1.9%, lower than market expectations of 2.4% and the previous value of 0.7% performance. The overall U.S. economic data released showed that the support for the dollar was still positive. Second, the Fed raised the federal benchmark interest rate by 25 basis points, although it was the first rate hike since December 2018, but because Fed Chairman Powell revealed the decision in advance and gave the possibility of a rate hike to the market on various occasions, especially through the dot plot pre-presented in the capital markets, it did not cause a market shock and was considered a successful rate hike, with the market atmosphere immersed in an optimistic The atmosphere is steeped in optimism, stimulating the stock market to rebound continuously, which constitutes a negative for the dollar index and a positive for non-dollar currencies. Third, the Russian-Ukrainian conflict in the continuation of the situation while fighting and talking, but also conveyed optimistic progress. Russia and Ukraine may take a few days to a week and a half to reach a peace treaty, Podolyaq, adviser to the chief of staff of the Ukrainian president, said Thursday. Podolyak also said that talks between Russian President Vladimir Putin and Ukrainian President Dzerensky could be held in recent weeks after the text of the agreement is finalized. Fourth, the risk of a Russian debt default was temporarily eliminated, with some Russian bondholders on Thursday having received dollar coupons on their Russian bonds due March 16. The Russian government also said it has repaid the coupons on the bonds that were supposed to mature this week. Fourth, the euro zone Thursday released February CPI annual rate of 5.9%; February core CPI annual rate of 2.7%, unchanged market expectations and the previous value; data slightly higher on the euro exchange rate once constituted a stronger support. Fifth, the Bank of England's March resolution to raise interest rates by 25 basis points, after the rate hike rose to 0.75%; and said that further rate increases may still be needed in the coming months.

In response to the current trend of the foreign exchange market and the analysis of the influencing factors, BRIC's view is that the stock market celebrated the end of the Fed's rate hike with a continuous rally, and many people even celebrated. In fact, these are only temporary, sooner or later the rate hike will support the strength of the dollar exchange rate from all levels, and need to pay attention to the rebound resistance of non-US currencies.

Rate hike sparks stock market frenzy, dollar drop is digging another hole

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