Markets in turmoil after hawkish Fed

17/06/2021

Wednesday brought some huge volatility to the markets as the Federal Reserve surprised with a hawkish tone in its rate projections.

The Fed kept benchmark rates and the pace of bond-buying (QE) unchanged, but the biggest shift is a hawkish tilt to its rate forecasts as Fed median projections showed 2 rate hikes by the end-2023, and 7 FOMC members saw a hike in 2022.

With the EURUSD pair down nearly 200 pips, the USD rocketed higher, falling below the 1.20 level, while the USDJPY pair advanced toward 111. The GBPUSD pair fell below the important 1.40 level. It looks like the USD might start some uptrend from now as many pairs are below or above their respective key zones.

In rates, the 10-year US yield soared 5% and jumped toward 1.6%, undermining precious metals. Gold and silver lost 2% yesterday, and the negative sentiment is seen today too. Silver dropped below 27 USD, and gold is falling toward 1,800 USD.

Oil slipped yesterday but was bought today, and the WTI benchmark has remained safely above the 70 USD support for now.

Later in the day, the US jobless claims will be released, potentially causing some volatility in the markets. 
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