The Fed decided to hike the rate. What to expect from the markets?

The Fed decided to hike the rate. What to expect from the markets?

The key rate decision

The Fed decided to hike the rate by 25 bp to 5.25%.

The Fed’s Chairman:

The Fed is no longer saying it is considering further policy tightening

But, it is not safe to say that we have already reached a restrictive level.

QE will be adjusted if additional risks arise

If inflation remains high, the regulator will keep rates high. Inflationary pressures are high

Our current forecast does not support rate cuts

Tighter credit conditions will undoubtedly put pressure on economic activity, the labor market, and consumer price growth.

We are more likely to avoid a recession than to have one in the near term

The Fed is sending a signal that the it isn’t going to decrease the rate soon, but the market is not so sure about that. JP Morgan: This is definitely the end of the Fed's rate hike cycle. A rate cut will occur as early as September.

RISK-OFF on the markets

EURUSD jumped to 1.1090 but, after a while, started falling. There is a local downtrend in the main Forex pair.

The American stock market plummeted. S&P500 is below its 200MA again. The most significant drawdowns are in the Energy sector and the Banking sector. There are two problems which we should pay attention to. The first one is the problem with the American banks. Too many of them are on the verge of falling. The second problem is the national debt ceiling. If it isn’t hiked, this will be a default.

XBRUSD crushed to the $70 level. The price of oil is falling owing to the recession risks. According to the EIA statistics, crude oil inventories decreased more than the forecast and dropped to -1.280M. We assume that it’s time to think of opening longs in oil. What are your suggestions about that, guys?

Meanwhile, Bitcoin and Gold started rising again. RISK-OFF came on the markets again. BTCUSD bounced from 50MA and reached 29250. Be careful with long positions, guys. Wait for the price to break the local trend line up.

XAUUSD touched 2080, and now it is returning. The local resistance level keeps holding at 2050 while the local support level is at 2010. 


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