Original insights into market moving news

Euro Market Open: DXY bid and stocks softer post-FOMC; BoE, SNB & more ahead

  • US stocks closed with losses and the S&P 500 fell beneath 3800 after the FOMC; APAC traded mostly lower
  • Fed hiked FFR by 75bps to 3.00-3.25% as expected in a unanimous decision; Fed dot plots saw the terminal rate forecast hiked to 4.6% from 3.8%
  • Fed Chair Powell in his Q&A largely reiterated the rhetoric from Jackson Hole, but he said it is likely that rates will get to levels in the dot plot
  • In FX, DXY rose to 111.79 overnight and USD/JPY whipsawed after the BoJ kept its monetary policy unchanged and maintained a dovish stance
  • Looking ahead, highlights include the policy announcements from the BoE, SNB, Norges Bank, CBRT & SARB, Speeches from BoE's Tenreyro & ECB's Schnabel


  • BoE, SNB, Norges Bank, CBRT & SARB Policy Announcements, Speeches from BoE's Tenreyro & ECB's Schnabel
  • Click here for the Week Ahead preview.


  • Click here for the BoE preview.
  • Click here for the SNB preview.
  • Click here for the Norges Bank preview.



  • Fed hiked FFR by 75bps to 3.00-3.25% as expected, in a unanimous decision and maintained guidance that ongoing increases will be appropriate.
  • Fed said it would be prepared to adjust the stance of monetary policy as appropriate, while it noted that inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures.
  • Fed Dot Plots saw the terminal rate, 2023 median rate forecast hiked to 4.6% from 3.8% which is towards the top end of analyst estimates and above money market pricing beforehand of 4.5%, while the 2022 dot plot was also more aggressive at 4.4% (prev. 3.4%).
  • Furthermore, the Dot Plots implied rate cuts to 3.9% and 2.9% in 2024 and 2025, respectively, while the long-run (neutral) dot was left unchanged at 2.5%.


  • Powell's presser lacked the bite of the Dot Plot with the Fed Chair providing little ground-breaking in his remarks. He kicked off his presser in a similar vein to his Jackson Hole speech, affirming the Fed's affinity to bring down inflation to target, adding that the Fed will bring rates further into restrictive territory.
  • Powell said the Fed has now moved to the "very lowest" level of what the Fed considers restrictive, saying there is still a way to go on rates, without giving specifics on where he sees the terminal aside from his comment that the Fed would likely get to levels in the Dot Plot.


  • The knee-jerk reaction to the statement and Dot Plots was a hawkish one, with particular attention on the 2023 median rate forecast being bumped to 4.6% from 3.8% in June, towards the hawkish side of both analyst and market expectations.
  • The moves did fade during Powell's presser and Q&A as he warned against gauging the Dot Plot as the Fed's plan, whilst also not providing any new hawkish surprises and touting there still being chances of a soft landing. However, Powell said in his concluding Q&A response that rates will likely get to levels seen in the Dot Plot.
  • Stocks were ultimately sold - SPX fell beneath 3800 - with indices extending to lows in late trade after Powell's presser/Q&A finished. The Treasury curve saw pronounced flattening whilst the long-end made session peaks after the FOMC. Meanwhile, the Dollar index hit a peak of 111.63 yesterday vs the intraday low of 110.12.


  • US stocks were lower and the S&P 500 fell beneath 3800 after the Fed hiked rates by 75bps to 3.00-3.25% and provided hawkish dot plots, while indices extended to lows in late trade after Powell's presser/Q&A finished.
  • SPX -1.73% at 3,789, NDX -1.80% at 11,637, DJIA -1.70% at 30,183, RUT -1.42% at 1,762.
  • Click here for a detailed summary.



  • APAC stocks were mostly negative in the aftermath of the FOMC where the Fed hiked rates by 75bps and raised their dot plot projections, with the terminal rate forecast increased to 4.6% from 3.8%
  • ASX 200 was closed today due to the National Day of Mourning for the Queen.
  • Nikkei 225 briefly fell below 27,000 although bounced off its lows as the BoJ stuck to its dovish policy.
  • Hang Seng and Shanghai Comp were pressured with notable losses in casino stocks and underperformance in the tech sector amid the higher rate environment as the HKMA also raised rates by 75bps in lockstep with the Fed.
  • US equity futures remained subdued in the aftermath of the hawkish Fed projections.
  • European equity futures are indicative of a lower open following the late selling on Wall Street, with the Euro Stoxx 50 future -1.8% after the cash market closed up 0.7% yesterday.


  • DXY remained firmer post-FOMC owing to the hawkish dot plot projections and after Fed Chair Powell noted that they moved to the "very lowest" level of what the Fed considers restrictive and there is still a 'ways to go' for rates.
  • EUR/USD fell to its lowest in two decades with the single currency also mired by Russia's recent nuclear threats.
  • GBP/USD suffered from the hawkish Fed and declined to its weakest in 37 years ahead of the BoE decision.
  • USD/JPY gained after the BoJ maintained its dovish policy, while there was some volatility which spurred speculation of intervention although Japan's top FX diplomat later denied having intervened so far.
  • Antipodeans were pressured amid the risk-averse mood and as USD/CNY briefly climbed above 7.1000.
  • Japan's top FX diplomat Kanda said they will respond appropriately to FX moves without ruling out any options and that excessive FX moves have a very bad impact on the economy, while Kanda stated they haven't intervened in the market but added that they won't necessarily comment on whether they intervened and there may be cases where they may conduct stealth intervention.
  • PBoC set USD/CNY mid-point at 6.9798 vs exp. 6.9946 (prev. 6.9536).
  • Brazil Central Bank maintained the Selic Rate at 13.75% as expected via unanimous decision, while it will assess if the prospect of holding the Selic Rate long enough will ensure inflation convergence and stated that future policy steps could be adjusted. Furthermore, it will remain vigilant and will not hesitate to resume the cycle of rate adjustments if disinflation does not happen as expected.


  • 10yr UST futures were ultimately lower although price action was volatile during the post-FOMC press conference as Fed Chair Powell initially pushed back on the dot plot in which he stated that it is not a plan or commitment but later suggested that rates will likely get to levels in the SEPs, which saw some renewed selling pressure for treasuries.
  • Bund futures remained lacklustre and continued to test the 141.00 level to the downside.
  • 10yr JGB futures were boosted after the BoJ stuck to its ultra-dovish policy settings and the central bank also doubled down on its fixed-rate operations today with a second offer for unlimited JGBs.


  • Crude nursed some of its recent losses but with upside limited after yesterday's choppy price action whereby a firmer dollar, mixed inventories and risk aversion unwound the geopolitical premium from Russia's nuclear threat.
  • UK government seeks LNG supplies from the US ahead of the winter energy crunch and is seeking proposals for contracts lasting up to 20 years, according to Bloomberg.
  • US Senator Manchin released the energy permitting bill to speed up energy projects which is expected to be included in the funding bill and his staff said the bill had the votes to pass the Senate, according to Reuters.
  • Spot gold saw a volatile reaction to the Fed announcement and eventually softened amid a firmer dollar.
  • Copper prices were choppy and ultimately returned to pre-FOMC levels.


  • Bitcoin found some reprieve from recent selling and rose back above the 18,500 level.


  • Hong Kong Monetary Authority raised the base rate by 75bps to 3.50%, as expected.
  • US Senators asked for a review of Apple's (AAPL) plan to use Chinese chips, according to Washington Post.
  • Japanese PM Kishida said they will further ease border restrictions from October, according to TBS.
  • BoJ kept its monetary policy unchanged, as expected, with rates at -0.10% and QQE with yield curve control maintained to target the 10yr JGB yield at around 0% through a unanimous decision. BoJ left its forward guidance unchanged in which it expects short- and long-term rates to remain at present or lower levels and maintained guidance on policy bias that it will take additional easing steps without hesitation as needed with an eye on the pandemic's impact on the economy, while it extended the pandemic relief program.


  • New Zealand Trade Balance (Aug) -2447M (Prev. -1092.0M, Rev. -1406M)
  • New Zealand Exports (Aug) 5.48B (Prev. 6.68B, Rev. 6.35B)
  • New Zealand Imports (Aug) 7.93B (Prev. 7.77B, Rev. 7.76B)



  • UK PM Truss said they are stepping up defence spending and want to work more closely with the US on energy and economic security.
  • UK PM Truss wants to resolve the Northern Ireland Protocol dispute by the 25th anniversary of the Good Friday Agreement, according to FT.



  • Ukrainian President Zelensky laid out five conditions for peace with Russia and said that they are non-negotiable, while conditions included punishment for Russian aggression, restoration of Ukraine's security and territorial integrity, as well as security guarantees. Zelensky also stated that Ukrainian neutrality is out of the question and he ruled out that a settlement can happen on a different basis than the Ukrainian peace formula, according to Reuters.
  • Ukrainian parliament said Russia released some senior commanders from Ukraine's Azov battalion who were taken prisoner after the Mariupol siege, while a senior Ukrainian official said a total of 205 Ukrainians and 10 foreigners were released by Russia and that Ukraine in return, handed over the leader of the banned pro-Russia political party Viktor Medvedchuk and 55 prisoners to Russia, according to Reuters.
  • IAEA said renewed shelling on Wednesday morning at the Zaporizhzhia nuclear power plant damaged cables providing electricity to one of its six units, while the IAEA Chief said he is aiming to go to Ukraine and Russia soon to discuss the Zaporizhzhia nuclear power plant.
  • EU's Borrell said EU ministers agreed that additional restrictive measures against Russia will be brought forward as soon as possible and agreed to continue providing military support, while new restrictive measures will be individual and sectoral.
  • German Chancellor Scholz said any threat from Russian President Putin to use nuclear weapons is unacceptable and they will stick to their course of supporting Ukraine and preventing an escalation.
  • UK PM Truss vowed UK military aid until Ukraine prevails, according to AFP News Agency.
  • Japan's Foreign Minister told the G7 meeting that Tokyo plans to implement measures to ban exports of chemical weapon-related products to Russia and plans to expand the list of Russian military-related organisations to which exports are banned.
  • North Korea said it has never supplied weapons or ammunition to Russia and does not plan to do so going forward, according to Reuters.


  • US President Biden and South Korean President Yoon reaffirmed commitment to ensure close cooperation to address the threat posed by North Korea, according to the White House.