Forexlive Americas FX news wrap: Dots continue to show 75 bps in cuts this year, risk pops

• Federal Reserve interest rate decision: Rates left unchanged
• FOMC dot plot & central tendencies from March 2024 meeting.EOY 2024 rate 4.6% vs 4.6% last
• Powell opening statement: Risks are moving into better balance
• Powell Q&A: The economy is performing well
• March Eurozone consumer confidence -14.9 vs -15.0 expected
• BOC Minutes: Conditions should materialize for cuts in 2024 but ideas on timing differed
• The SEC is waging a compaign to classify ethereum as a security – report
• Ethereum Foundation under investigation – report
• EIA weekly crude oil inventories -1952K vs +13K expected
• ECB’s Schnabel: We may now be facing a turning point in real interest rates
• ECBs de Cos: surely expected latte policy impact is a downside risk to euro growth outlook

• Bank of Japan weighing next rate hike in July – report
  

Markets:

• Gold up $25 to $2181
• US 10-year yields down 2.3 bps to 4.27%
• WTI crude oil down $1.63 to $81.68
• S&P 500 up 0.9%
• AUD leads, JPY lags

The US dollar softened ahead of the FOMC decision and that turned out to be the right move as the dots didn’t show a shift to 50 bps from 75 bps this year, as was speculated. The dollar initially soft off but most of that was taken back before the press conference, in part because the Fed’s dots for 2025 and 2026 moved up to show one fewer cut and the core inflation forecast was slightly higher.

However Powell added to the dovish move by largely embracing a dovish stance and saying there doesn’t need to be job losses to start with rate cuts. He refrained from offering any kind of guidance on timing but did say that January CPI was likely skewed.

All told, the market liked what it heard with US stocks hitting a record and the dollar slumping. The front end rallied as the market priced in about 7 bps more in hikes this year with a June cut up to 84%.

During the press conference, a Nikkei report hit highlighting the potential for more BOJ hikes. Those are likely coming in October but could come as soon as June. The report weighed on USD/JPY.

In general though, this was a fairly big and straightforward move as the market continues to see a dovish Fed.

This article was written by Adam Button at www.forexlive.com.