United States stocks slip on tech drop, dollar up after Fed: Markets Wrap
- Author: Zachary Reyes Jun 17, 2017,
Jun 17, 2017, 18:59
"I would think that at some point the market is going to be pricing in even greater risks that the Fed might be moving too quickly", said Mark Cabana, head of U.S. short rates strategy at Bank of America Merrill Lynch in New York.Benchmark 10-year U.S. Treasury notes US10YT=RR rose 23/32 in price to yield 2.1273 percent, from 2.207 percent late on Tuesday.
After hitting 2017 highs of 1.1283 last week, EUR/USD spent the weekend at the level of 1.1195. Following this week's unexpectedly slow U.S. inflation report the Fed also downgraded its 2017 inflation outlook.
Optimism about the global economy also underpinned European equities where the pan-European STOXX 600 (.STOXX) was up 0.6 percent, led by industrials and financials. However, besides an increase in confidence in French President Emmanuel Macron over the past week, the outlook for the currency bloc is largely unchanged which has left the Euro flat.
The Federal Reserve surprised investors with some hawkish policy decisions on Wednesday. Monday's monthly budget statement from May was slightly worse than expected at $-88b and consumer inflation expectations from May slipped from 2.79% to 2.59%.
Meanwhile, USD/CAD advanced 0.32% to trade at 1.3287, pulling further away from the previous session's more than three-month low of 1.3163.
The Fed hiked USA interest rates on Wednesday as was widely expected.
The Fed has a 2 percent inflation target and tracks an inflation measure which is now at 1.5 percent.
"It's like a game of chicken between investors and the Federal Reserve", he says.
"With the ongoing weakness in the dollar, we do not expect the rupee to breach 65.50-66.00 levels this year", it said.
However, investors don't know what to expect next from the Fed amid rising U.S. political and economic uncertainty.
Thursday's US data didn't have any notable effect on US Dollar exchange rates.
The dollar rallied Thursday after the Federal Reserve indicated weak USA economic data won't derail its plans for raising interest rates.
'The FOMC's response is likely to be a "dovish hike" and that's priced in, to a large degree. The Fed said on Wednesday it expected annual inflation rates to "remain somewhat" below 2 percent in the near term but stabilize around the central bank's target over the medium term. Policy makers agreed to raise their benchmark lending rate for the third time in six months, maintained their outlook for one more hike in 2017 and set out some details for how they intend to shrink their $4.5 trillion balance sheet this year.
Thursday will see the publication of May's inflation stats from France and Italy, with final May inflation results for the overall Eurozone being published on Friday.
The Australian Bureau of Statistics earlier reported that the number of employed people rose by 42,000 in May, beating expectations for a 10,000 gain.