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| US Dollar Weakens as BOE Prepares for Possible Rate Hike Pause in May |
The US Dollar continues to weaken against its counterparts after suffering heavy losses following the US Federal Reserve's policy announcement on Wednesday. The Swiss National Bank and the Bank of England are set to announce interest rate decisions, with the BOE forecasted to hike its key rate by 25 bps to 4.25% following Wednesday's inflation figures from the UK. The US economic docket will feature data on Initial Jobless Claims, Chicago Fed National Activity Index, and New Home Sales for February, while Eurostat will publish preliminary Consumer Confidence for March.
After raising its policy rate by 25 basis points to the range of 4.75-5%, the Fed dropped the reference to "ongoing increases" in rates and said that some additional policy firming may be appropriate. FOMC Chairman Jerome Powell noted that the Silicon Valley Bank's collapse would likely lead to tighter financing conditions that would cool down the economy. However, Powell told reporters that they have not discussed making any changes to the balance sheet implementation.
Following the rebound on Tuesday, the benchmark 10-year US Treasury bond yield fell nearly 5% on Wednesday, leading to the US Dollar Index's bearish pressure. Wall Street's main indexes fell sharply and closed deep in negative territory on Wednesday, but US stock index futures are up early Thursday.
Gold price gained more than 1% on Wednesday, capitalizing on plummeting US yields, and XAU/USD preserves its bullish momentum. Bitcoin lost more than 3% on Wednesday but started to climb toward $28,000 early Thursday. Ethereum is up 1% early Thursday, trading slightly above $1,750, after losing nearly 4% on Wednesday.
Overall, the market remains in a state of flux, with investors eagerly awaiting the SNB and BOE's interest rate decisions and the data on Initial Jobless Claims, Chicago Fed National Activity Index, New Home Sales, and Consumer Confidence. The Fed's decision to raise its policy rate and drop the reference to ongoing rate increases has contributed to the US Dollar's weakening, while Gold and Bitcoin continue to experience fluctuations.
