Neither the dollar nor the Dow Jones was happy with Jerome Powell’s debut outing as Fed chair, with Wednesday’s meeting rippling into Thursday’s trading.
The fact that the central bank raised rates was arguably the least interesting thing to happen. No, focus instead lay both on the fact the Fed signalled 2, not 3, more hikes in 2018, and that Powell suggested American business chiefs were concerned about the current trade tensions.
All this took the dollar sharply lower – with cable at $1.415 for the first time since the start of February and the euro back above $1.237 – while at the same leaving the Dow Jones facing a sub-24600 open this afternoon.
The state of the Dow futures, alongside the re-emergence of trade war chatter ahead of Trump’s China tariff announcement later this Thursday, left the European indices in a sorry state after the bell. The DAX and CAC plunged 0.8% and 0.6% respectively, while the FTSE dipped 0.4% to sit just 10 or so points above 7000.
Though the US looks set to dominate, Thursday is actually a pretty busy day for the UK. Not only is there the latest retail sales reading – set to rise from 0.1% to 0.4% month-on-month in a continuation of the week’s broadly hawkish data – but also the month’s Bank of England meeting. And while Mark Carney’s umpteenth get together is unlikely to be quite as noteworthy as Powell’s debut, investors will be keen to see whether the MPC is still on track for a May rate hike.
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