Today welcomed a much-anticipated FOMC session, and Participants probably did not hear what they wanted to hear.
After an already quite intense morning, in which assets were going back and forth to fight another rise in Energy Commodities, the Press Conference pinned down risk sentiment.
The initial catalyst for the rise in Commodities was the new escalation of attacks on Energy infrastructure in the Middle East.
WTI Oil quickly bounced from $92 to $99, invalidating the Head and Shoulders and forming what resembles the basis of a range, but Brent is where the action gets scary.
The London-Exchange Petroleum quote saw a significant bounce, now consistently above $105, as President Trump threatened to stop defending the Strait of Hormuz to drag Allies into defending the most important 10 km stretch in the world.
Crude initially eased ahead of the FOMC press conference but found what it needed to keep rebounding as Iran retaliated for the overnight attacks on its gas infrastructure.
Oil is currently squeezing at the close, so expect the path ahead to be rocky.
Regarding the Federal Reserve, they decided to maintain their rates at 3.50% to 3.75%, unchanged for the third consecutive meeting.
The initial text wasn’t decisively hawkish, but looking at the high expectations for better news, Markets were disappointed.
As Powell’s penultimate Press Conference was unfolding, the US dollar saw another meaningful bounce. This further pressured an already rough trading session, particularly against Stocks and Metals.
In his remarks, the Fed Chair emphasized the inflationary pressures and supply shocks from the post-COVID era, which are not pointing to any dovish direction, and that helped the USD rally.
Still, the speech itself wasn’t so hawkish either, just because he didn’t lean into hikes after a couple of questions asking whether such were on the table. It seems that traders will now only be looking at Oil and how it will increase inflation prospects.
