The Fed could raise rates more than three times this year
Wall Street stocks slipped overnight after the Fed minutes offered more details on the central bank’s shift towards a more hawkish monetary policy. The minutes suggested that the Fed could raise rates more than three times this year and the balance sheet normalization to start sooner after the first rate hike than last time. The Dow Jones Industrial Average fell 1.07%, the S&P 500 shed 1.9%, and the Nasdaq Composite dropped 3.3%.
On the data front, the ADP report showed private payrolls increased by 807,000 jobs in December, more than double what economists expected. Strong economic data coupled with hawkish Fed minutes sent the dollar higher across the market during the North-American session on surging US Treasury bond yields.
As such, EUR/USD gave up a large portion of its daily gains to finish marginally above the 1.1300 figure. On Thursday, the pair continued to retreat and got back below both this level and the 20-DMA. Later today, the weekly jobless claims, goods trade balance, and ISM services PMI will be in focus in the United States.
Meanwhile, oil prices rose after OPEC+ producers stuck to an agreed output target rise for February. Brent crude climbed to nearly 1.5-month highs around $81.50 in a knee-jerk reaction to the decision but failed to preserve gains and retreated back to the flat-line in the $80 area by the end of the day.
Asian stock markets followed Wall Street lower on Thursday after the Fed signaled it might hike interest rates faster to cool inflation. The Shanghai Composite in China shed 0.25%, the Nikkei 225 in Tokyo tumbled nearly 3%, the Kospi in Seoul retreated 1.13%, and Sydney’s S&P-ASX 200 sank 2.7%.
