Home Daily Commentaries USD gains on more hawkish Fed stance

USD gains on more hawkish Fed stance

Thursday 15 December, 2022

Daily Currency Update

The USD is making gains this morning as Markets unpack comments yesterday from Fed Bank Chair Jerome Powell.  The FOMC raised rates by the expected 50 points yesterday afternoon. In the follow up press conference though, Powell illuded to the bank changing its outlook on how high they may need to take rates before the hikes stop. The guidance provided suggests that the average of the terminal high end will now be 5.1% versus the previously expected 4.3%.  This has driven up the USD as it indicates that rates will be higher for longer. In this morning’s data, record Black Friday numbers didn’t rescue overall retail sales in November with sales falling -0.6% from last year. Economists had been looking for a more mild reduction of -0.1%.

Key Movers

The Euro saw a drop overnight after the European Central Bank raised its interest rate by the expected 0.5% but didn’t provide the guidance on other tightening measures that some investors were looking for. The Bank of England followed in suit, also hiking rates by 50 points during European sessions. In Asia-Pacific, the AUD fell off against the Greenback after disappointing economic news in China. China is Australia’s biggest trading partner so bad news in China has a trickle-down effect. Chinese industrial production rose by 2.2%, lower than the 3.5% predicted.

Expected Ranges

  • EUR/USD: 1.0610 - 1.0685 ▼
  • GBP/USD: 1.2303 - 1.2440 ▼
  • AUD/USD: 0.6754 - 0.6878 ▼
  • USD/CAD: 1.3529 - 1.3624 ▲