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March 2017

Federal Reserve likely to hike interest rates

Published: Monday 13 March 2017

  • Federal Reserve likely to hike interest rates 
  • Article 50 could be triggered as early as tomorrow
By Zeta Webber
This morning, the US Dollar has weakened, ahead of the US Federal Reserve meeting on Wednesday, where a rate hike by 25 basis points is priced in. Federal Reserve Chair, Janet Yellen, indicated a couple weeks ago that the US central bank would likely hike interest rates at its March 14th – 15th policy meeting. Rising inflation, together with a tighter labour market, stock market boom and strengthening global economy, has left some economists expecting that the Fed could increase rates much faster than currently anticipated by financial markets. 

There are rumours doing the rounds that Article 50 could be triggered as early as 14th March, as the House of Commons is expected to debate and overturn the changes asked for by the House of Lords. Sterling has been hit by a new wave of selling pressure over the last couple of weeks, as traders position themselves for more volatility once the process of leaving the EU is underway. The uncertainty is troubling for investors and it is difficult to imagine the Pound seeing any meaningful improvement at this stage.

European Central Bank President, Mario Draghi, is due to speak in Frankfurt at 1:30 today. Currently EUR-USD is at a monthly high, ahead of his speech at 1.07. As well as US Labor Market data, no other significant data is due out today. Anything unexpected could cause some volatility.

Looking towards the rest of the week, we will have 24 hours of central bank frenzy from Wednesday to Thursday, as the Bank of Japan, Bank of England and Swiss National Bank will all announce monetary policy decisions this week. All three announcements could be non-market movers, as the focus will be on the United States. However, any volatility from the US the day before could continue into early day trade on Thursday, bringing central bank meetings to the fore.

The value of money

An elderly man remembers the good old days:

“When I was young, my mum could send me to a shop with a single Pound, and I would bring back 5kgs of potatoes,  2 loaves of bread, a bottle of milk, a piece of cheese and 10 eggs.

Nowadays, that’s impossible. There are simply to many security cameras.”


Today's Major Economic Releases

EUR 13:30 European Central Bank President Draghi Speaks    
USD 14:00 US: Labor Market Conditions Index 1.3 1.3

For more information, infographics and the latest currency insights, visit www.halofinancial.com/blog