Equities and Dollar Face the Pressure After Release Of FOMC Minutes
By Anatol Thomas
The FOMC’s policy decision meeting is significant for the dollar value and equities market. Despite the interest rate hike introduced earlier, the Federal Reserve meeting minutes were hawkish at its best. The policymakers are keen on decreasing the balance sheet in 2017. This means that risk appetite will significantly reduce. The equity market was pushed down when the policy decisions suggest that the Fed considers the equity prices to be high. The Federal Reserve usually doesn’t give its opinion about the equity market so as not to cause confusion among the investors.
Investors are worried that the tax reforms, deregulations, and infrastructure spending plan proposed by Trump would take a long time to complete. Paul Ryan dampened the mood by proposing that tax reforms will take more time to implement. He added that new health care plans won’t be available anytime soon. However, FOMC once again confirmed that there will be three interest rate hikes in this year.
The impending meeting between POTUS Donald Trump and Chinese President Xi Jinping has also created political tension in the market. The Chinese have announced earlier that they are not afraid to take any action if the United States decides to cut trade deals with the Chinese.
The US stock market lost 0.3% during early trade. The dollar in the forex market lost 0.2% as yen slowly climbed up to 110.500 against USD. Euro was also dominating the market as it was trading at $1.067 against the greenback.
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