FOMC minutes catch the eye
Both days FOMC meeting starts today and ends tomorrow with a decision as the global economy feels the pain of the omicron variant. The Federal Reserve is expected to maintain its hawkish stance as it prepares the market for takeoff at its next meeting.
Anyone hoping for some form of Fed Put this week will likely be disappointed. The main objective of the Federal Reserve is currently to keep inflation under control. Because the economy is close to full employment and inflation remains consistently high, the Federal Reserve cannot help the stock market at the same time.
the we dollar index rose today, posting a two-week high around 96.20, as investors sought safe-haven currencies amid tensions between Russia and the West over Ukraine and awaited the outcome of the Fed meeting. dollar/yen hovering above 114.00, while euro dollar dip below 1.1300. American action futures suggest a negative open after a green day on Monday. Sterling held at a three-week low of 1.3435 against the dollar as investors remained wary of risky assets amid rising tensions in Ukraine and expectations of a rate hike of the Federal Reserve.
the Russian-Ukrainian the border remains tense. 8,500 US troops have been placed on high alert for possible deployment to reinforce NATO forces in Eastern Europe. “It’s pretty obvious that the Russians have no intention at this time to de-escalate,” U.S. officials said, but Russia said it hadn’t escalated tensions. Biden had a chat with European leaders, including French President Macron and German Chancellor Scholz, as diplomatic efforts continue. “Complete unanimity with all European leaders,” Biden noted. We have the distinct impression that this story is far from over and that the current stalemate will last for some time.
BoC rate hike on Wednesday
the Bank of Canada will host its first policy meeting of 2022 on Wednesday. Over the past week, betting on a rate hike has increased in intensity, and a 25 basis point hike is currently priced in at nearly 85%. Expectations for quick action were bolstered by recent CPI data showing annual inflation hit a 30-high of 4.8% in December. The dollar/loonie is moving slightly higher today near 1.2650.
Australian inflation has hit its highest level in 7 years every year
australia Inflation hit its highest annual rate since 2014 in the December quarter, driven by spending on gasoline and housing, fueling market speculation of an early rate hike. The CPI rose 1.3% in the fourth quarter and 3.5% for the year. The Aussie/Dollar remains above 0.7100 but with a negative bias.