The US Federal Reserve raised its key rate by 25 b.p. to 0.75% and projected another three rate hikes in the following year.
Despite a certain degree of “hawkishness” the FED cooled market enthusiasm saying that the monetary tightening implies gradual increases leaving themselves a room to adjust forecasts.
It is highly likely that the policymakers will raise borrowing costs three times in the coming year.
Markets was almost certain in December increase although reaction on US Dollar suggests some degree of uncertainty has been hovering in the air. US Dollar index soared more than half of percent posting biggest declines against Australian Dollar plunged together with commodity market.
European currency and Pound also slid against the Dollar as the tone of Yellen speech appeared to be more than hawkish ensuring short term strengthening of the American currency.
Oil plunged after short-term spike provoked by upbeat EIA US inventories data as stronger Dollar negatively affects Dollar-denominated commodity market. FED outcome also incited a rout on equity markets both in developed and emerging markets. Gold plunged due to the gloomy prospects of yields on the metal while Silver rose.
Based on the current fundamental data here are some short-term trading calls:
Oil (WTI): BUY, TP 54.50, SL 49.50
EURUSD: SELL, TP 1.0490, SL 1.0645
USDJPY: BUY, TP 119.50, SL 113.90
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