Daily summary: Fed hikes by 25 bp and signals 'soft pause'

• FOMC delivered a 25 basis point rate hike with Fed funds rate increasing to 5.00-5.25% - the highest level since June 2006 peak

• New statement omitted phrase that further policy tightening is appropriate and instead said that FOMC will determine extent of needed tightening

• Fed chair Powell said that Fed will take meeting-by-meeting approach in determining extent of required tightening and warned that Fed is ready that to do more if needed

• Powell also warned to tighter credit conditions are likely to weigh on economic activity and job market

• Wall Street indices trade slightly higher today. Indices dipped after FOMC decision but has later recovered during Powell's presser

• US dollar dropped after FOMC decision with EURUSD moving close to 1.1100 mark. However, greenback recovered later on and now trades in the 1.1050 area - near pre-decision levels

• Gold jumped to around $2,035 per ounce following FOMC decision but has pulled back to $2,020 area later on

• WTI dropped below $70 per barrel as demand concerns are exerting pressure on energy commodities' prices

• European stock market indices traded mostly higher today. UK FTSE 100 gained 0.2%, German DAX added 0.6% and French CAC40 moved 0.3% higher

• Russia accused Ukraine of attempting to assassinate Russian president Putin after 2 drones were shot down over the Kremlin last night and ruled out any negotiations. Ukraine denied involvement in the incident saying it was Russian false flag operation

• ADP report showed 296k increase in US employment in April (exp. 150k)

• US services ISM jumped from 51.2 to 51.9 in April (exp. 51.8)

• Official US report showed 1.28 million barrel drop in oil inventories (exp. -0.9 mb), a 1.74 mb build in gasoline inventories (exp. -0.5 mb)

• New Zealand employment increased 0.8% QoQ in Q1 2023 (exp. 0.4% QoQ) while the unemployment rate stayed unchanged at 3.4% (exp. 3.5%). 

• Australian retail sales increased 0.4% MoM in March (exp. 0.3% MoM)

• Russia's Novak said that OPEC+ monitors oil price drop but it may turn out to be temporary

• AMD dropped over 8% as company reported slightly better than expected results but delivered a lackluster sales guidance for Q2 2023

EURUSD experienced a strong move higher after FOMC rate announcement. However, majority of those gains has been erased since and now the main currency pair is trading close to pre-announcement levels in the 1.1050 area. Source: xStation5