The Fed FOMC surprised markets by signalling 2 possible rate hikes in 2023 which saw a stronger Dollar against all currencies, higher bond yields, weaker stock markets, and a weaker Gold price. Fed Chairman Jerome Powell was quick to clarify that the interest rate forecasts were based on the FOMC members median rates outlook and that the Fed policy would be based on “outcomes, not outlooks”, but the Dollar remains on the front foot this morning. It also seems that inflation won’t be as transitory as initially expected as the Fed also upped the inflation forecasts. Emerging Market currencies retreated with the Rand trading above R14.00 in thin markets yesterday. The Rand closed 1.8% weaker on the day at R13.99 and is currently quoted at R13.98. Further weakness in the Rand will be dependent on international currency movements for now.
Gold and Platinum succumbed to the strong Dollar, a bit of a bloodbath with gold losing just over $50, closing down at $1,811 with Platinum at $1,122 respectively while Palladium finished up on the day. Copper took a bit of a beating yesterday, losing around 4% to trade at a 7-week low as it seems that China is trying to “cool” commodity prices. Some other news on the diamond front is that De Beers found a 1,098-carat diamond in Botswana. The Oil price has slipped off its highs, trading at $76.94 for Brent and $71.71 for WTI.
The Dollar remains buoyed by the first hint of easing, still trading strongly against the Euro and Pound at 1.2000 and 1.4000 respectively this morning while the DXY has risen to 91.13. US Treasury 10Y and 30Y yields rose 1.58% and 2.20% respectively after the FOMC yesterday, pushing Wall Street into the red. The S&P lost 0.54%, the Nasdaq 0.24%, and the Dow 0.77% with US futures trading in the red this morning as well. Chinese stocks are positive but the Nikkei has closed weaker. Today we have local Retail Sales data as well as the weekly US jobless claims number. US Treasury Secretary Janet Yellen is scheduled to testify before the Joint Economic Committee on Washington’s economic outlook and monetary policy later today.