Fed Hikes Interest Rates by 25 Basis Points

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On Wednesday, the Greenback recovered as the Federal Reserve hiked interest rates by 25 basis points, recorded as the second rate hike of 2017.
However, it was agreed to hike rates even with the anticipations of inflation running well below the central bank's target.

Moreover, the Federal Reserve gave more detail on how it will unwind its $4.5 trillion balance sheet.

  • The U.S. dollar index (DXY), which measures the greenback against a basket of currencies, failed to settle above 97 pips.

Gold prices failed to manage its gains and declined to $1,260. Technically, the yellow metal could get support for the current levels, as markets await important data from U.S. Otherwise, the precious metal could further decline to the key support of $1,240.

The Sterling pound settled below $1.2750 vs. USD, in anticipation of Bank of England’s (BoE) policy meeting that might disclose its inflation and growth forecasts for the coming period amid prevailing political uncertainty and the impending Brexit negotiations. Not to forget that Cable also awaits Mark Carney’s speech later on today.

Oil prices fell materially yesterday after U.S. government data showed a build in U.S. crude stocks and an increase in gasoline stockpiles and crude production. U.S. crude traded below $45 and could decline further during the next period.

The most important economic events:

  • GBP Bank of England Rate Decision (JUN 15): (GMT 11:00) – Important – Forecast (0.25%) – Previous (0.25%).
  • GBP BOE Corporate Bond Target (JUN): (GMT 11:00) – Important – Forecast (10b) – Previous (10b).
  • GBP BOE Asset Purchase Target (JUN): (GMT 11:00) – Important – Forecast (435b) – Previous (435b).
  • GBP BOE Governor Mark Carney Speaks at Mansion House in London: (GMT 20:00)

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