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Forex News February 11, 2022

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HSBC

HSBC now expects the Fed to raise rates by 50 basis points in March .

The firm expects the Fed to raise rates by 150 basis points this year. They won’t be the last to alter their minds, as Citi did yesterday.

At this time, a 50 basis point rate rise next month is pretty much completely priced in (more or less). So it will depend on whether the Fed decides to reverse course in the coming weeks.

Dollar

  • So far today, the dollar has held firmer due to increased demand for Fed rate rises.
  • A rate rise of 50 basis points in March is now fully factored in.
  • After the release of the US consumer inflation report – which showed inflation at its highest in 40 years – Bullard was the key trigger for the turnaround in yesterday’s wild trading session.
  • The dollar was higher on the release, then tumbled heavily before reversing all of that and more into trading today.
  • At this point, a 50-basis-point rate rise in March is the most likely scenario, so we’ll see how the Fed responds in the coming weeks.
  •  The dollar is holding up well today as the market anticipates greater desire for a more aggressive Fed.
  • • The EUR/USD currency pair is down 0.3 percent to 1.1380, with sellers threatening a further slide below the 100-day moving average of 1.1413. Furthermore, pricing is probing the seas below its 200-hour moving average.
  • • The crucial near-term level is holding up for the time being, but it will be a significant level to keep an eye on in the coming sessions.
  • • Commodity currencies are taking the brunt of the losses, with the AUD/USD down 0.5 percent to 0.7130. Today’s low was 0.7110, close to a challenge of the previous upswing’s 50.0 retracement mark at 0.7108.
  • It’s worth noting that the pair’s dip yesterday came after a test of its 100-day moving average, a significant level that has resisted every bullish advance since the beginning of the year.

Equities

Eurostoxx -1.1 percent, Germany DAX -0.7 percent, France CAC 40 -1.1 percent, UK FTSE -0.8 percent, Spain IBEX -1.3 percent • Hawkish Fed possibilities weigh on markets • Eurostoxx -1.1 percent, Germany DAX -0.7 percent, France CAC 40 -1.1 percent, UK FTSE -0.8 percent, Spain IBEX -1.3 percent

Stocks are continuing to fall following yesterday’s selloff, as investors continue to bet on a Fed rate rise of 50 basis points in March. It’s difficult to predict how attitude will change ahead of the weekend, but we’ll see whether there are any indications of life when Wall Street joins the battle later.

S&P 500 futures are now down 0.5 percent, Nasdaq futures are down 0.7 percent, and Dow futures are down 0.4 percent.

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