HiFX Morning Update, March 22 2018

HiFX Morning Update, March 22 2018

The NZDUSD opens at 0.7208 (mid-rate) this morning.

As widely expected the Federal Reserve has raised rates for the first time in 2018 and signalled that at least two further hikes are coming before the end of the year.

New Federal Reserve Governor Jerome Powell announced that the central bank now sees the benchmark rate at 2.9% in 2019 and 3.4% in 2020 up from 2.7% and 3.1% respectively. The 10yr Bond yield has pushed up from 2.87% prior announcement to 2.92%.

“The economic outlook has strengthened in recent months,” with officials also repeating previous language that they anticipate “further gradual adjustments in the stance of monetary policy”.

The vote to raise the federal funds rate target range to 1.5% to 1.75% was a unanimous 8-0. The quarterly forecasts showed that policymakers were divided over the outlook for the benchmark interest rate in 2018. Seven officials projected at least four quarter-point hikes would be appropriate this year, while eight expected three or fewer increases to be warranted.

Wage growth in the UK accelerated at the fastest pace in more than two years during the three months to January Average earnings excluding bonuses grew 2.6% year-on-year in the three months to January, which was the fastest pace since November 2016, when regular pay rose 2.7%.

This morning the RBNZ acting Governor Grant Spencer is expected to confirm that the RBNZ are in no hurry to hike rates and that the current record low of 1.75% should remain unchanged for the foreseeable future.

Global equity markets are mixed - Dow +0.45%, S&P 500 +0.31%, FTSE -0.32%, DAX +0.01%, CAC -0.24%, Nikkei -0.47%, Shanghai -0.29%.

Gold prices are up 0.8% trading at $1,322 an ounce. WTI Crude Oil prices continue to spike, up 2.0% over the past 24 hours, trading at $64.72 a barrel

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