Major central bank decisions were released from the US Federal Reserve, the European Central Bank and the Bank of England. The Fed Reserve stated on Wednesday afternoon that the central bank would double the pace of tapering and also outlined a roadmap for 8 interest rate hikes through 2024. News from the ECB and BoE supported the EUR and GBP respectively and the BoE surprised markets with a rate hike of 10 bps. Bloomberg spot index is trading lower on a broad risk rally.
December 16, 2021
EUR/USD 1.1340 GBP/USD 1.3352 USD/CAD 1.2782 AUD/USD 0.7209 USD/JPY 113.86 USD/CNH 6.3779 USD/ILS 3.1073 USD/MXN 20.9520 USD/CHF 0.9205 USD/INR 76.0950 USD/BRL 5.7029 USD/SGD 1.3636 USD/DKK 6.5564 USD/SEK 9.0129 USD/NOK 8.9641
The US dollar soared to two-week high following yesterday’s Fed policy decision which was largely in line with market expectations. The central bank stated that it would double the pace of tapering and outlined a plan for 8 interest rate hikes through 2024. Overnight the market risk sentiment shifted to risk-on placing downward pressure on the greenback. The Bloomberg spot index is trading almost 0.7% lower.GBPThe Bank of England surprised markets by raising a key interest rate by 10 bps to 25 bps. There will be no press conference with this decision.EUR
EUR/USD is trading higher following ECB meeting. Decisions from the central bank were largely in line with expectations: deposit rate unchanged at -0.5%, main refinancing rate unchanged at 0%, APP pace boosted to EU40B for second quarter and extending PEPP reinvestments until at least end of 2024. One of the more impactful comments from the statement was “From October 2022 onwards, the Governing Council will maintain net asset purchases under the APP at a monthly pace of EUR20 billion for as long as necessary to reinforce the accommodative impact of its policy rates. The Governing Council expects net purchases to end shortly before it starts raising the key ECB interest rates.”CADUSD/CAD dropped 0.5% the largest intraday drop in more than a week. The Canadian dollar strengthened alongside G-10 peers as market risk sentiment shifted to risk-on trading.ASIA/PACIFICThe Australian dollar fell earlier in the trading session following comments from RBA Governor Lowe suggesting that there may be no rate hikes next year. The currency pair has since reversed its trend on a broad risk rally.
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