FOMC acts as expected but hawkish tone extends dollar support.
March 29th - So the dollar is trading higher across the board on the back of upbeat US consumer confidence, the as-expected 25 basis point rate hike from the Fed and the fact that the hawkish stance over monetary policy looks set to prevail so long as inflationary pressures continue. However, there’s been little additional economic data slated for release in the early part of the week and the tempo is certainly set to increase as we approach the month-end. Overnight numbers out of Japan saw retail sales reverse the earlier downbeat start to the year and grown by around 1% month-on-month – doubtless something that has helped bring USD/JPY back below the 118 level in overnight trade – whilst as today’s session continues it’s going to be cable that stands to get the most direction off fundamental data. UK GDP for Q4 and the CBI monthly distributive trades readings are both due and with the Pound firming up in light of the fact a quick rate cut is looking less likely, any apparent weakness in this data could offer good reason to start extending short sterling positions.
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