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Fed Holds, USD Rallies as Oil Surge and Geopolitics Shake Markets

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Forex Market 

USD Strengthens as Fed Holds, Risk Sentiment Weakens

The USD strengthened overnight after the Federal Reserve held rates steady in an 11–1 vote, with Chairman Powell signaling that persistent inflation—driven by rising energy prices—could delay rate cuts. Escalating tensions in the Middle East further boosted safe-haven demand, putting pressure on risk-sensitive currencies.
AUD/USD traded within a softer range and settled near the lows, while NZD/USD also weakened. Meanwhile, EUR/USD moved lower and GBP/USD declined as the stronger USD weighed on major currencies. USD/JPY surged toward multi-decade highs, while USD/CAD climbed before easing slightly.
The move in FX markets was primarily driven by the Fed’s firm stance that there will be no rate cuts without clear progress on inflation, alongside rising oil prices with Brent crude trading higher. Ongoing geopolitical risks in the Middle East and stronger US Treasury yields further supported the USD’s upward momentum.

General Market

Wall Street

  • Dow Jones: -1.6% (46,260)
  • S&P 500: -1.1% (6,642)
  • Nasdaq: -1.2% (22,204)
  • VIX: +7.4% (24.03)

Asia-Pacific

  • Nikkei: +2.9% (55,239)
  • Shanghai Comp: +0.3% (4,063)
  • ASX 200: +0.3% (8,641)

Europe

  • FTSE: -0.9% (10,305)
  • DAX: -1.0% (23,502)
  • CAC: -0.1% (7,970)

 

Headlines to Watch

United States

  • Focus remains on inflation outlook following Fed’s decision to hold rates
  • Higher PPI data reinforces concerns that inflation may stay elevated
  • Markets watching housing data for signs of economic resilience

Europe

  • ECB rate decision and Lagarde’s comments in focus
  • Energy-driven inflation risks rising due to Middle East tensions
  • Labour cost data to provide insight into wage pressures

United Kingdom

  • Bank of England expected to hold rates amid rising inflation risks
  • Jobless claims data to indicate labour market strength

Asia-Pacific

  • BOJ policy decision with focus on currency weakness and inflation impact
  • AUD sensitive to unemployment data and broader risk sentiment
  • NZ GDP to signal pace of economic recovery
Currency Pair Mid-market Rate
AUD/USD 0.7030
AUD/NZD 1.2128
AUD/JPY 112.30
AUD/CNY 4.8262
AUD/EUR 0.6130
AUD/GBP 0.5298
AUD/HKD 5.5076

 

 

 

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