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Market Reactions to Fed’s Decision: Stocks Surge, Dollar Slips

By Samir Al Khoury,

The Federal Open Market Committee (FOMC) decided in its meeting yesterday to maintain interest rates at 5.25% and 5.50%, a move anticipated by most analysts. However, the more significant news was the dot plot expectations, which indicated a rate cut of 25 basis points this year, in contrast to the three cuts expected back in March. Looking ahead to 2025, the Fed anticipates four interest rate cuts.

Notably, inflation has slowed in the United States. The headline consumer price index (CPI) recorded an annual rate of 3.3% yesterday, lower than both the expectations and the previous reading of 3.4%. Similarly, the core CPI, which excludes food and energy, registered an annual rate of 3.4%, below the expected 3.5% and the prior reading of 3.6%.

 How Did the Dot Plot Forecasts and Jerome Powell’s Speech Affect Financial Markets?

 Major US stock indices, including the S&P 500, Dow Jones, Nasdaq 100, and Russell 2000, closed with strong gains. Additionally, the VIX Fear and Volatility Index declined to 11.94 points, signaling stability and investor satisfaction in US stock markets. Gold, Bitcoin, and most foreign currencies also rose against the US dollar.

What About US Treasury Bonds?

Prices of both short-term and long-term US Treasury bonds rose significantly. The yield on two-year US Treasury bonds decreased to 4.67%, its lowest level since April 5, 2024. Similarly, the yield on 10-year US Treasury bonds fell to 4.25%, its lowest since April 1, 2024.

So, Who Is the Biggest Loser?

The US dollar index emerged as the biggest loser, recording 104.25 points yesterday and currently hovering near 104.75 points. Technically, it appears that a consolidation trend is prevailing for the US Dollar Index at this stage, as it trades around the 104 to 105 points range. The biggest challenge lies in breaching the 50-day moving average, which stands at 105.11 points. Meanwhile, the Relative Strength Index (RSI) indicates neutrality for the dollar index, recording 50 points.

Please note that this analysis is provided for informational purposes only and should not be considered as investment advice.

Taurex is the trading name of Zenfinex Global Limited, Stochastic Africa SL Ltd, Zenfinex Global LLC, and Zenfinex Limited.

Zenfinex Global Limited is registered in the Republic of Seychelles with registration number: 8428731-1 and is regulated by the Financial Services Authority of Seychelles (license number SD092). Its registered office address is F20, 1st Floor, Eden Plaza, Eden Island, Seychelles.

Stochastic Africa (SL) Limited is a company registered in Sierra Leone with Company Number: SL270319STOCH05271 and is licensed by the Bank of Sierra Leone under license number BSL/SAL/2023 and with the registered office at 148D Wilkinson Road, Freetown, Sierra Leone.

Zenfinex Global LLC is a company registered with the Financial Services Authority in Saint Vincent and the Grenadines under registered number 138 LLC 2019. Its registered office is Hinds Building, Kingstown, Saint Vincent, and the Grenadines.

Zenfinex Limited is a company registered in England and Wales under registered number: 11077380. Authorised and regulated by the Financial Conduct Authority under firm reference number 816055. Its registered office is 4th Floor, 4 Eastcheap, London, EC3M 1AE, United Kingdom.

*All trading involves risk.

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