© Reuters
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Investing.com – The US dollar rose towards the end of the US session to the 111 level.
The hike comes after the Federal Reserve again hiked the interest rate sharply and Powell insisted that the Fed would not care about a correction in any market or a sharp decline. What is needed is to slow down economic growth to reduce inflation, which the latest reports have indicated has not subsided despite the drop in the price of an important component, which is gasoline. .
Following the Fed report, Powell said interest rates could range between 4.50% and 4.60% increases by the end of this year.
This indicates that inflation will remain strong towards the end of the year. The forex market is now seeing the economy go into recession, so they are turning to the US dollar according to analysts at ING.
expectations of adults
The largest wealth manager in the world, BlackRock, predicts that the Fed will continue to raise rates for a period of time, and the data is the last word on the tightening program and rate hikes.
The question now, says Rick Rieder, head of the global quotas investment team, is: slowing growth will cause the Fed to stop raising interest rates and its monetary policy tightening program and start adjusting demand. with already tight monetary conditions? The question remains unanswered with the Fed not announcing a clear plan.
As one wealth manager puts it, “The markets are actually preparing for what the Fed could do by continuing its rate hike program to reach the tightening zone.”
And the entry of interest rates into the tightening zone means very high interest rates.
markets
The stock market suffered a sharp decline after the news, with the management of Treasury bills, which pushed yields to rise strongly, falling by 1.7%, and the two-year yield rose above 4%, level highest since 2007, and 10 annual bond yield of 3.640%, the highest since 2011.
The S&P 500 is down 20% for the year, and as heightened fears persist, the market and risk appetite will remain one of the Fed’s casualties.
Until the situation stabilizes, markets will remain volatile towards risk and everyone will prefer to switch to fixed income assets.
Despite its initial rise following Powell’s words about inflation and its radicalization, and inflation usually benefits gold as a hedge against it, gold has not been able to stay strong against the index. of the dollar and higher yields.
With this dollar it remains for the moment the good of all, even if it does not give a return to its holders, but there is a case of escape.
Levels expected for the dollar index and gold today
Dollar on the frame today
Support: 109.022, 109.595, 109.949
Resistance: 111.095, 111.449, 112.022
Gold on today’s frame (spot contracts)
Support: 1638.00, 1650.99, 1659.02
Resistance: 1685.00, 1693.03, 1706.02
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