FOMC fosters confusion

Clare MacCarthy

Senior Editor, Saxo Bank Group
Clare MacCarthy first joined Saxo Bank Group in 2012 to work as a senior editor on TradingFloor.com. Prior to this, she worked as a Denmark-based foreign correspondent for The Economist and the Financial Times and also served as Copenhagen bureau chief for Dow Jones Newswires.

Ever-so-slight language tweaks in last night's statement from the Federal Open Market Committee left the market divided as to the Fed's intentions as some interpreted them as dovish and others as bearing a hawkish hue. "The dollar reaction is a bit difficult to gauge as there was quite a good rally going into the meeting which basically then unwound," says John J Hardy, Saxo’s head of forex strategy. 

Elsewhere in FX, the Norwegian krone will be getting a good bit of attention today, Hardy says: "EURNOK is up against 9.70+ resistance ahead of the Norges Bank meeting and the nokky could be hit if there's a dovish tone".

Meanwhile, equities remain stuck in their range and also displayed a confused reaction to the FOMC statement, says Peter Garnry, Saxo’s head of equity strategy . "The Fed is sticking to its trajectory and is indicating that inflation and the economic outlook warrant a gradual rate hike cycle". However, underlying dollar strength should add to short-term momentum in European equities despite recent macro weakness.

Among individual stocks, electric vehicle maker Tesla is the standout among yesterday's crop of corporate earnings as it outdid expectations in both revenue and earnings per share.

Finally today, crude oil remains stuck in rut even though new data released yesterday revealed the biggest US stock increase since January. "This shows that the focus is firmly on May 12 and Trump's decision about the Iran nuclear deal," says Ole Hansen, Saxo’s head of commodity strategy.

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