Markets Surge After Central Banks – Dow up 1.25%
Global indices look set to drive higher today after an action-packed day in the markets, leading to increased optimism. The highlight of a full calendar day was the ECB which raised rates as expected sending the single currency soaring to levels not seen for over a month. US markets had their first full session after the Fed pause and investors piled into stocks, the Dow leading the way, up 1.26%, followed by the S&P and Nasdaq, closing up 1.22% and 1.15% respectively. The dollar took a hit on the renewed optimism, dropping nearly 0.8% on the day and Gold rallied strongly after initially dropping to multi-month lows.
FX Markets Back in Play
Currency markets seem to have woken from slumber over the last few trading sessions as central bank updates have helped spur interest rate differentials. In the last couple of weeks, we have seen surprise hikes from the RBA and the BOC along with the first pause in the cycle from the FOMC. Yesterday we saw the ECB hike rates and the Euro took off, climbing over 1% on the day against the greenback as well as appreciating on most of the crosses. Data will continue to play its part in the short term, but traders are now starting to feel that we will see trends forming as central banks move out of tightening cycles with varying paces as they all look to avoid hard landings in economies threatened by recession.
Bank of Japan and More Data Ahead
It has been a busy economic calendar week and today will be no exception with the Bank of Japan due to release its latest rate update along with the usual accompanying statement and Press conference. The Yen has been volatile this week, and traders expect more sharp moves around the event. The European session has relatively little on the radar to trouble investors but expects more moves as the market continues to digest yesterday’s ECB rate update. Into the US session and we have the University of Michigan Consumer Sentiment data to be released as well hearing from Federal Reserve Governor Christopher Waller.
