Daily Market Pulse
Dollar recovers slightly after FED announcement
2 minute readEUR/USD
The European Central Bank raised their Deposit Facility Rate by 50bps to 2.5%, as expected. The statement tilted hawkish with an indication of not only another 50bps hike in March but the need for rates to “rise significantly, at a steady pace.” Nonetheless, the market interpreted another part of the statement about policy evaluation in May as an indication of a switch to 25bps and spot subsequently declined on the day.
USD/CAD
Spot has remained confined to a 0.35% overnight after yesterday’s post-Fed volatility. Building Permits MoM come in worse than expected at -7.3%, versus a -3.9% expected drop, data that will support the Bank of Canada’s most recent decision to pause rate hikes.
GBP/USD
The Bank of England raised their policy rate by 50bps to 4.0%, as expected. The vote breakdown was 7-2 which was initially interpreted as hawkish giving spot a knee-jerk 0.5% lift. The subsequent statement leaned dovish, however, implying that the end is in sight for the hiking cycle and setting the tone for a step-down to 25bps next meeting. The gains in spot were gradually reversed and the pair is now down on the day.
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