- Markets saw sizable declines at the end of yesterday's session after the Fed cut interest rates as expected by 25 basis points to 4.5%, but at the same time heavily revised its macroeconomic forecasts and indicated a more cautious approach to future moves.
- According to Powell, it may take more than 1-2 years from now to reach the inflation target. In response, yesterday we saw a nearly 1.5% drop in the EURUSD pair and a 4.5% drop in US100 quotes.
- This morning the Bank of Japan also made its decision on rates. There were no surprises in this aspect, however, and the BoJ decided to keep rates unchanged at 0.25%. The distribution of bankers' votes was 8 voting for a hold and one voting for a hike.
- The yen initially fell to its lowest level in a month against the dollar, before strengthening slightly. The USDJPY pair is currently holding in the 155.00 area.
- Investors are now waiting for a press conference with Chairman Ueda.
- There is also a lot going on in New Zealand. Q3 GDP data indicated a massive 1% q/q decline, a reading much worse than the -0.4% expected, and a 1.5% y/y decline, also much worse than expected. The Reserve Bank of New Zealand is not scheduled to meet until February 19. Expectations for a 50bp rate cut at that meeting have increased (and further cuts at subsequent meetings).
- The New Zealand dollar has been subjected to the double pressure of a strong USD and weak domestic data, resulting in declines of 2.5% over the past 24 hours on the NZDUSD pair.
- Precious metals are rebounding after yesterday's downward corrections, which brought gold to support zones set by the 100-day EMA.
- Today, investors will also learn a number of key macro data. These will include the Norges and Riksbank decisions, data from the Polish labor market, the BoE decision, the Q3 GDP report from the US, jobless claims from the US and gas inventory data from the US.
- Bitcoin is trying to hold above the psychological barrier of $100,000. Most cryptocurrencies are losing and mimicking worse sentiment from traditional markets.
Volatility currently observed in the FX market. Source: xStation
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