It’s a nervy time for investors. There are many factors that should be supporting riskier assets – improving economic outlooks in the U.S, Europe and China, including raising short term interest rates and continued bond buying.
The defining moment of the week for the USD came as the first press conference of the President-elect Donald Trump unfolded. Few details on topics the market cared like infrastructure spending or fiscal stimulus were shared while the most combative aspects of his campaign were in full view. Inauguration on Friday, January 20 starts the countdown for the first 100 days of the Trump era that is expected to deliver bold action that could see the USD appreciate across the board.
Fed minutes released yesterday revealed that apart from a unanimous agreement to raise interest rates for the first time in a decade last month, the committee expressed concerns as to the results of future Trump policies, with a view to maintain a “wait-and-see approach.”
The Fed did not surprise, they did what was expected of them on the headline, but it’s their foresight that has capital markets wildly gyrating.
The big takeaway from yesterday’s FOMC meeting is the increase in the pace of tightening that’s been signaled for next year. Policy members voted unanimously to raise its target for the fed funds rate up +0.25% to +0.5%- 0.75%.