US dollar hits red on Wednesday, ahead of the US opening bell and the release of the Fed minutes.
The US Dollar (USD) is giving up European gains and turning red ahead of Wednesday’s US opening bell. The US Dollar Index (DXY) soared again above 104 after the Wall Street Journal reported a move in US Fed futures that indicated a rate hike was now possible. The rationale for this repricing is a wage report in the Eurozone by the European The Central Bank (ECB) highlighted that increased salaries remain broadly based and will result in greater long-term sticky inflation.
Markets are suddenly waking up to the possibility of a Fed rate hike within the next three months.
On the economic data front, traders are anticipating the release of the Fed Minutes later this evening. Together with the Wall Street Journal story, it demonstrates how unstable the market is presently pricing in any possible rate policy. Traders will be looking for signs in the Minutes about whether the Fed will cut before the summer, throughout the summer, or not cut at all and may even raise.
Daily Market movers: Barkin adds to the fire.
According to an article in the Wall Street Journal’s Marketwatch, there is a tiny chance of a rate hike in the next three months. This possibility is not shown in the US Chicago Mercantile Exchange Fed fund futures, but it does appear in options linked to the Secured Overnight Financing Rate.
The weekly Mortgage Bankers Applications (MBA) Index falls further, from -2.3% last week to -10.6%.
Near 13:55, the delayed Redbook Index was announced and increased from 2.5% to 3%.
Charles Barkin, a Richmond Fed member, made some comments on Wednesday. That soured the tone even more. Barkin believes that corporations will continue to raise prices until consumers fight back. And that even as goods deflate, services will remain too high to return to normal inflation levels.
US Dollar Index has risen over 104, reversing Tuesday’s decline.
The US Treasury Department is returning to markets for a 20-year bond auction around 18:00.
The US The Federal Reserve is scheduled to issue the minutes. From its most recent meeting at 19:00.
Ahead of those Minutes, US Atlanta Fed President Raphael Bostic is scheduled to talk at 13:00. Followed by Federal Reserve Governor Michelle Bowman about 18:00.
This Wednesday’s equity market is extremely spread. With China being the greatest winner. Both the Hang Seng and the Shenzhen Index are up more than 1% for the day. European shares are pulling down. With the British FTSE100 down about 1%. US market futures are trading down ahead of the US opening bell.
The CME Group’s FedWatch Tool is now tracking the March 20th meeting. Expectations for a pause are 93.5%, while rates are expected to be trimmed by 6.5%.
The benchmark 10-year US Treasury Note trades at approximately 4.26%. , a little softer than on Tuesday when the bond market began for the week.
