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“A great time for the Fed to watch and wait” – Fed Chair

Published March 21, 2019

By George Hopkinson

The Federal Reserve left rates unchanged overnight but revised projections of economic growth and rate projections into 2019. The market is now pricing no rate rises until 2020, where there is only one raise priced into the market. To add further weakness to the greenback, the Fed announced that their Quantitative Tightening (QT)* program will slow from May-Sept.

Fed Chair Jerome Powell concluded the economy is in a “good place” and is “A great time for the Fed to watch and wait,” however Mr. Powell highlighted the ongoing risks of the U.S.-China trade deal, Brexit and the U.S. economy in general.

The AUD/USD rallied to four-week highs off the back of the Fed news and opened up this morning above the 0.7100 figure it has been challenging for the past few days. U.S-China trade war continues… it’s been reported that some U.S. negotiators are concerned that China is pushing back against American demands in trade talks, even as President Donald Trump sounded optimistic about reaching a deal that could boost his re-election chances.

UK PM, Theresa May wrote to EU Council President Donald Tusk requesting to delay Brexit until 30 June; Mr. Tusk said he believed the EU would agree to a short extension, but only if Mrs. May’s deal is signed off by MPs next week at the third time of asking. In this morning’s Press Conference Mrs. May insisted “I am not prepared to delay Brexit any further than 30 June”.

Australian Labour Data will be the focus for the AUD this morning. Expectations are for 14k new jobs with unemployment to remain at 5.0%. Stronger numbers may be the catalyst for a push above 0.7150.