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Fed members new projections have hikes starting in 2022

  Federal Reserve set the stage for rate hikes next year -- far sooner than its developed market peers

 Federal Reserve said "a moderation in the pace of asset purchases may soon be warranted"

 The Bank of Japan made no policy changes and is not seen lifting rates anytime soon

 The Bank of England meets later today, with traders expecting it to keep rates steady

The dollar hit its highest in a month today and pressed the euro towards major support levels, after the Federal Reserve set the stage for rate hikes next year, far sooner than its developed market peers are expected to move.

The U.S central bank left policy settings unchanged overnight and, as expected, did not announce the beginning of asset purchase tapering. But the Federal Reserve said "a moderation in the pace of asset purchases may soon be warranted" and Fed Chair Jerome Powell said board members believed tapering could conclude around mid-2022, opening the way for rate hikes after that. The dollar rose broadly after his comments, especially against the euro and yen. 

The U.S yield curve flattened and Fed funds futures markets moved to price a 50% chance of a hike in October and to fully price a 25 basis point rate hike in December. Liquidity was lightened by a holiday in Japan today. 

Powell didn't give any specifics about the start of the taper, he said there was broad agreement at the end of the taper, one which 'concludes around the middle of next year.

The yen also lost ground after Powell's news conference and ended up falling 0.5% for the session, its sharpest drop in more than three months, taking it to 109.87 per dollar, about the middle of a range it has kept since March. The Bank of Japan, which met on Wednesday, made no policy changes and is not seen lifting rates anytime soon while the European Central Bank is also lagging the Fed. 

Fed members' new projections have hikes starting in 2022. The yen, a safe-haven asset, had also suffered a bit yesterday because developer China Ever Grande offered the market some relief after its main unit said it agreed to settle a bond interest payment with some domestic creditors.

Euro

The single currency fell as the dollar hit its highest in a month today in the Asian session and pressed the euro towards major support levels, after the Federal Reserve set the stage for rate hikes next year, far sooner than its developed market peers are expected to move. The U.S central bank left policy settings unchanged as expected. Overall, the EUR/USD traded with a low of 1.1744 and a high of 1.1777 before closing the day around 1.1750 in the New York session.

Yen

The Japanese Yen broadly fell after the Federal Reserve said "a moderation in the pace of asset purchases may soon be warranted" and Fed Chair Jerome Powell said board members believed tapering could conclude around mid-2022, opening the way for rate hikes after that. Liquidity was lightened by a holiday in Japan on Thursday. Overall, the USD/JPY traded with a low of 109.90 and a high of 110.21 before closing the day around 110.06 in the U.S session.

British Pound

The British Pound fell to a one-month low yesterday as investors pushed back expectations of a rate hike by the Bank of England after a flurry of weak data. For sterling to rally again, BoE needed to layout its timeline for raising rates starting early next year, which seems quite premature. A lot depends on how Britain's labor market will fare. Overall, the GBP/USD traded with a low of 1.3687 and a high of 1.3766 before closing the day at 1.3698 in the New York session.

Canadian Dollar

The Canadian Dollar strengthened to a five-day high yesterday as worries about the potential collapse of property developer China Ever Grande receded, but gains were capped by a hawkish shift in guidance from the Federal Reserve. Worries over a possible default by China's No. 2 property developer have weighed on financial markets in recent days. Overall, USD/CAD traded with a low of 1.2582 and a high of 1.2693 before closing the day at 1.2683 in the New York session.

Australian Dollar

The Australian Dollar was on the defensive today in the Asian session after the Federal Reserve offered a relatively hawkish outlook on U.S rate increases, and as investors wait anxiously for news on the China Ever Grande saga. The property developer is due to pay interest on one of its dollar bonds today, and default might trigger another round of global risk aversion. Overall, AUD/USD traded with a low of 0.7272 and a high of 0.7344 before closing the day at 0.7389 in the New York session.

Euro-Yen

EUR/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also issuing a bearish stance. The Relative Strength Index is above 39 and lies below the neutral zone. In general, the pair has lost 0.11%.

Sterling-Yen

Currently, GBP/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish tone and MACD is also indicating a bearish stance. The Relative Strength Index is above 45 reading and lies below the neutral zone. On the whole, the pair has lost 0.43%.

Aussie-Yen

Currently, the cross is trading below 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also indicating a bearish stance. The Relative Strength Index is above 42 reading and lies below the neutral region. In general, the pair has lost 0.49%.

Euro-Sterling

This cross is currently trading below 14, 50 and 100 days moving average. Fast stochastic is indicating a bearish tone and MACD is issuing a bullish signal. The Relative Strength Index is above 40 and lies below the neutral region. Overall, the pair has gained 0.32%.

Sterling-Swiss

This cross is trading above 14 and below 50, 100 days moving average. Fast stochastic is issuing a bullish stance and MACD is also indicating a bullish tone. The Relative Strength Index is above 62 and lies below the neutral region. In general, the pair has lost 0.01%.

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All information has been prepared by TraderFactor or partners. The information does not contain a record of TraderFactor or partners prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of futures performance.

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Powell was clear to detach tapering from the rate liftoff, or raising interest rates

  The dollar is nursing losses today and kept near multi-week lows

 Federal Reserve Chair Jerome Powell laid out a slower-than-expected path to rate hikes

 Traders latched on to the wiggle-room in the rates outlook and sold dollars

 The Australian and New Zealand dollars also hung on to sizeable Friday gains

The dollar slid on Friday after Federal Reserve Chair Jerome Powell indicated in a highly anticipated speech that the U.S central bank could start tapering its massive support to the economy could start by year's end, which was not as fast as many in the market had assumed. Powell said there had been clear progress toward maximum employment and he believed that if the U.S. economy improved as anticipated, "it could be appropriate to start reducing the pace of asset purchases this year." But Powell told the Fed's annual Jackson Hole symposium the timing and pace of tapering should not be construed as a signal for when interest rates will begin to rise. The speech showed Powell has not adopted the hawkish stance of some Fed officials. It's pretty clear that if you were worried about the timeline, that we announce in September that we're going to taper starting Oct. 1, that's not there in this speech. It's not as bad as feared based on the most extreme of the hawks. 

The dollar index, which measures the greenback's performance against a basket of six major currencies, fell 0.39% to 92.6760. 

The euro rose 0.37% to $1.1794, while the yen fell 0.24% at $109.8200. After minutes of the Fed's policy-setting meeting in July was released last week, the dollar advanced because most market participants anticipated tapering to begin this year. 

Powell was clear to detach tapering from the rate liftoff, or raising interest rates. 

The dollar fell as market participants sharply lowered expectations for the Fed’s long-term tightening trajectory. The dollar began to retreat about 15 minutes before Powell spoke, after James Bullard, president of the St. Louis Fed, reiterated his hawkish view that tapering should begin soon and end by next year's first quarter. Benchmark 10-year Treasury yields fell 3.4 basis points to trade at 1.3104%. On Thursday yields jumped to 1.375%, the highest since Aug. 12. 

The Canadian dollar rose 0.56% to 1.2612 versus the U.S dollar.

Brent futures, the international benchmark for crude, rose $1.63 to settle at $72.70 a barrel and gained 11.5% for the week. 

The Canadian currency generally takes its cues from oil, the risk with the S&P 500 as a proxy, and interest rate differentials. 

The Canadian dollar's strength on Friday was a reflection not so much of Canada, but what's happening in the U.S and the market takeaway from Powell's speech. 

Britain's pound jumped half a percent to the dollar to more than a week's high on Friday and was set for a 1% weekly gain as the greenback fell after U.S Federal Reserve chair Jerome Powell stopped short of signaling the timing for a policy shift.

Euro

The single currency gained on Friday as the dollar fell as market participants sharply lowered expectations for the Fed’s long-term tightening trajectory. The dollar began to retreat about 15 minutes before Powell spoke, after James Bullard, president of the St. Louis Fed, reiterated his hawkish view that tapering should begin soon. Overall, the EUR/USD traded with a low of 1.1744 and a high of 1.1777 before closing the day around 1.1750 in the New York session.

Yen

The Japanese Yen traded higher in Friday’s trading session as the dollar nursed losses and kept near multi-week lows after Federal Reserve Chair Jerome Powell laid out a slower-than-expected path to rate hikes, while a storm lashing oilfields in the Gulf of Mexico lifted oil-exposed currencies. Powell was vague on the timing of tapering. Overall, the USD/JPY traded with a low of 109.90 and a high of 110.21 before closing the day around 110.06 in the U.S session.

British Pound

The British Pound jumped half a percent to more than a week's high on Friday and had a 1% weekly gain as the greenback fell after U.S Federal Reserve chair Jerome Powell stopped short of signaling the timing for a policy shift. The lack of a concrete signal about the potential tapering of the central bank's stimulus program knocked the dollar lower. Overall, the GBP/USD traded with a low of 1.3687 and a high of 1.3766 before closing the day at 1.3698 in the New York session.

Canadian Dollar

The Canadian Dollar gained on Friday after the greenback dropped broadly after Powell managed to flag an exit from emergency monetary policy settings that did not spook markets or suggest a rush to raise interest rates. Traders latched on to the wiggle-room in the rates outlook and sold dollars, while Treasury yields fell. Overall, USD/CAD traded with a low of 1.2582 and a high of 1.2693 before closing the day at 1.2683 in the New York session.

Australian Dollar

The Australian Dollar is edging higher versus the US Dollar in today’s Asia-Pacific session. The Greenback is unchanged against most of its peers. Traders may be digesting Fed Chair Jerome Powell’s comments from Friday’s Jackson Hole Economic Symposium. Mr. Powell’s message hinted that tapering QE asset purchases will likely commence this year but failed to give a clear timeline. Overall, AUD/USD traded with a low of 0.7331 and a high of 0.7379 before closing the day at 0.7368 in the New York session.

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All information has been prepared by TraderFactor or partners. The information does not contain a record of TraderFactor or partners prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of futures performance.

Hurricane Ida life-threatening

Hurricane Ida is one of the strongest storms to ever hit Louisiana.

Ida is weakening to a tropical storm, which will turn to life-threatening floods.

Today we might see Hurricane Ida turning in flash flooding, damaging winds, and tornadoes threatening thousands of lives. 

Some areas are already left without electricity and phone lines and more power outages are expected. 

More than 1 million people are without power. The first death is already reposted in Lousiana. President Joe Biden requests a major disaster and recovery plan.

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All information has been prepared by TraderFactor or partners. The information does not contain a record of TraderFactor or partners prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of futures performance.