Market Update – September 22/2022

Written by Andria Pichidi
  • USDIndex – extended gains to 111.51, as the FOMC boosted rates by 75 bps, but it was a much more hawkish result than that. The SEP revisions were the focus and they did not disappoint, with the dots coming in much higher than expected, steepening the near-term trajectory and concluding with a higher than previously forecast terminal rate. Chair Powell also stated the policy path the Fed actually takes will be enough to get the job done.
  • Yields: 2-year finally climbed through 4% to close at 4.03%, the first time with that handle since October 2007. The 10-year was 5 bps richer at 3.510% after surging to 3.624% just after the Fed’s release.
  • EUR – lingering at 0.9820.
  • JPY – lifted to 145.44, as Kuroda’s warning on the Yen may help to limit the move higher as it leaves markets speculating about direct intervention in forex markets, although most expect Japan to try and enlist support from the US and shy away from going it alone.
  • GBP – dipped to 1.1220.
  • Stocks in the red with losses of -1.79% on the US100, and -1.7% on the US30 and US500GER40 and UK100 futures meanwhile are down -1.6% and -0.8% respectively.
  • USOil – at $83.00, as supply concerns are counterbalanced by speculation that aggressive central bank action will hit the recovery.

Overnight – BoJ will continue with the easy policy settings until the 2% inflation goal is met, adding that the bank won’t hesitate to ease policy settings further if needed. FOMC boosted the rate band 75 bps as expected, from 3.0% to 3.50%. This makes a total of 300 bps in rate increases to the highest since 2008. And more hikes are on the way as the policy statement reiterated that the Committee “anticipates that ongoing increases in the target range will be appropriate.” Additionally, the dot plot showed a median funds rate at 4.4% for the end of 2022, or about 125 bps of hikes from here, keeping another 75 bp increase on the table. The median rate is at 4.6% for the end of 2023. The vote was unanimous. This is a hawkish 75 bp hike, and it’s a higher for longer stance through 2023.

Today – The SNB delivers 75 bp hike as expected. Hence focus turns to BOE announcement and US jobless claims.

Biggest FX Mover @ (06:30 GMT) CHFJPY (+1.03%) MAs aligning higher, MACD histogram & signal line turned positive and rising. RSI 78, H1 ATR 0.471, Daily ATR 1.599.

About the author

Andria Pichidi

Having completed her five-year-long studies in the UK, Andria Pichidi has been awarded a BSc in Mathematics and Physics from the University of Bath and a MSc degree in Mathematics, while she holds a postgraduate diploma (PGdip) in Actuarial Science from the University of Leicester.