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The minutes confirm the Fed's hawkish position

The minutes confirm the Fed's hawkish position

created Forex Club23 May 2024

The transcript of the minutes from the last meeting published yesterday FOMC confirmed the recent comments of American bankers suggesting that rates would be kept at higher levels for a longer period of time. The dollar appreciated in the first reaction, which was related to bankers questioning the current degree of economic tightening in order to overcome inflationary pressure. However, the initial pullback in the risk market was quickly erased, which helped Nvidia's better-than-expected results, the market king of the AI ​​sector.

The Fed will remain more hawkish

Comments from Minutes suggest that the Fed will maintain a more hawkish narrative, but it is difficult to see this information as radically different from the statements we have heard so far. Although the bankers announced that they do not even rule out raising interest rates, the key phrase in the announcement seems to be "if the situation requires it." This is in line with the bankers' statements so far, emphasizing that decisions on further interest rate movements depend on data coming from the economy.

The ultimately presented report did not make much of an impression on the money market. The money market still estimates that the first rate cut of 25 points will occur with a 69% probability in September this year (4 percentage points less than before Minutes).

Nvidia increases dividend

Nvidia exceeded market expectations for another quarter in a row. In addition to better results in all key financial data, the company also announced a 10-1 stock split and an increase in the dividend. In response to the results, the company records an increase in post-office trading of approximately 6%.. Meeting investors' expectations allowed them to erase the early declines after the Minutes reading and set a relatively optimistic tone for the morning session in Europe.

The New Zealand dollar is still the leader on the FX market (extension of reaction after the decision RBNZ). Declines on the broad market are observed primarily in the US dollar and the Japanese yen. The Polish zloty loses slightly in the morning, which may be due to weak retail sales data. We will currently pay PLN 3.9400 for a dollar, PLN 4.2720 for a euro, PLN 4.3105 for a franc, and PLN 5.0189 for a pound.

Source: Mateusz Czyżkowski, XTB

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