Jerome Powell, Chair of the U.S. Federal Reserve, has reassured the financial markets by emphasising a likely downward adjustment in future interest rates. This guidance follows a series of inflation reports that had stoked expectations of tighter monetary policy.
Picture: AUDUSD prices on the rise as recorded on VT Markets trading app.
In the currency markets, the Australian dollar remained robust, maintaining its overnight gain of 0.8% and stabilizing at $0.6529, briefly touching $0.6540. This performance allowed it to surpass the 200-day moving average of $0.6522, suggesting a continuation of its upward trajectory.
The New Zealand dollar showed stability at $0.5926, holding steady after a 0.7% increase, though it approached the 20-day moving average of $0.5944 without breaking through, indicating potential resistance at this level.
Powell’s comments came after the Federal Reserve decided to hold interest rates steady, a move that had been widely anticipated. His assertion that an increase in rates was unlikely in the near term provided relief to those concerned about a possible hawkish pivot in response to recent high inflation figures.
The broader impact on the U.S. dollar was negative, with the dollar index falling 0.6% against major currencies. This decline was exacerbated by a sharp rise in the yen, likely spurred by intervention from Japanese financial authorities, highlighting the sensitive balance central banks maintain in global currency markets.
Australian government bonds mirrored the positive response seen in U.S. Treasuries, with yields on three-year bonds falling 5 basis points to 4.072% and ten-year yields also decreasing by the same margin to 4.460%. These movements reflect a flight to safety and investor alignment with Powell’s cautious stance.
Australia reported a significant narrowing of its trade surplus in March to the lowest point in more than three years, which might pose challenges for economic growth in the first quarter. Additionally, a smaller-than-expected increase in building approvals by 1.9% in March suggested that issues in the housing market, particularly supply shortages, continue to exert upward pressure on property values.
You might be interested: Australian Shares Rise with an Eye on Upcoming Federal Reserve Meeting
The upcoming policy decision by the Reserve Bank of Australia is now in sharper focus, with market participants anticipating a potential shift towards tighter monetary policy in response to inflation concerns.
Start trading with VT Markets today. Click here to open a live account.
Education
Company
FAQ
Promotion
Risk Warning: Trading CFDs carries a high level of risk and may not be suitable for all investors. Leverage in CFD trading can magnify gains and losses, potentially exceeding your original capital. It’s crucial to fully understand and acknowledge the associated risks before trading CFDs. Consider your financial situation, investment goals, and risk tolerance before making trading decisions. Past performance is not indicative of future results. Refer to our legal documents for a comprehensive understanding of CFD trading risks.
The information on this website is general and doesn’t account for your individual goals, financial situation, or needs. VT Markets cannot be held liable for the relevance, accuracy, timeliness, or completeness of any website information.
Our services and information on this website are not provided to residents of certain countries, including the United States, Singapore, Russia, and jurisdictions listed on the FATF and global sanctions lists. They are not intended for distribution or use in any location where such distribution or use would contravene local law or regulation.
VT Markets is a brand name with multiple entities authorised and registered in various jurisdictions.
· VT Global Pty Ltd is authorised and regulated by the Australian Securities & Investments Commission (ASIC) under licence number 516246.
· VT Global is not an issuer or market maker of derivatives and is only allowed to provide services to wholesale clients.
· VT Markets (Pty) Ltd is an authorised Financial Service Provider (FSP) registered and regulated by the Financial Sector Conduct Authority (FSCA) of South Africa under license number 50865.
· VT Markets Limited is an investment dealer authorised and regulated by the Mauritius Financial Services Commission (FSC) under license number GB23202269.
· VTMarkets Ltd, registered in the Republic of Cyprus with registration number HE436466 and registered address at Archbishop Makarios III, 160, Floor 1, 3026, Limassol, Cyprus.
Copyright © 2024 VT Markets.