Euro Soars as USD is Undermined in Markets And Fed Speakers Maintain Their Hawkish Comments

Euro has maintained gains from yesterday against the sinking USD while the markets are optimistic that the heightened rate hikes will soon come to an end. However, they might end up disappointed as the rhetoric from FED officials is pointing in a different direction.

San Francisco Fed President Mary Daly maintained a hawkish stance overnight, saying the pain from heightened rates from people is on the inflation side, not on the jobs front.

She stated the need to maintain a restrictive policy for some time once it is in place and described inflation as ‘corrosive’ and ‘toxic.’ Her stance is similar to that of John Williams, the New York Federal Reserve President. The rest of the week will also see several hawkish comments from Fed speakers.

The Fed appears determined to disappoint market expectations.

Fed Chair Jerome Powell’s address at the Jackson Hole symposium in late August turned the tide on an early exit for their rate path.

APAC equities have followed on from the strong Wall Street lead, and with Hong Kong catching up after a few days off, the Hang Seng index has piled on more than 5% gain as it plays catch up.

Australia and Japan have also seen decent upside for their stock markets.

The RBNZ also hiked rates by 50 bp as anticipated to 3.50%. The RBA raised rates by 25 bp yesterday instead of the 50 bp forecast., AUD/NZD is lower again today. USD/JPY dipped below 144 and has found support, while GBP/USD is currently above 1.1400.

Elon Musk avoids a legal battle by agreeing to buy Twitter at the original price that he bid for the company.

Crude oil has eased around 0.50% from the North American close, with the WTI futures contract trading near US$ 86 bbl. Gold has also held onto overnight gains, trading a touch below US$ 1,720 an ounce.