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Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail client accounts lose money when trading CFDs.
Important Notice - Fraud awareness
Important Notice - Scam alert
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
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Powell signals 25-basis-point March rate hike

The Federal Reserve Chairman Jerome Powell said during a Congressional Monetary Policy Committee hearing earlier this month that the Fed's interest rate meeting in March will initiate the first rate hike in over two years. Powell pointed to a rate hike of at least 25 basis points (0.25%), but he did not rule out higher rates. The Fed's final decision will focus on this month’s interest rate meeting.

 

More Focus on Fed Monetary Policy

The annual rate of the US consumer price index in February reached a 40-year high of 7.9%, and the monthly rate rose to 0.8%. Many market participants believe that if the Fed raises interest rates by only 25 basis points or even 50 basis points, it will not be enough to suppress the high inflation. The point is that the Fed must consider a careful and moderate pace of interest rate hikes while implementing the appropriate scale of tapering its bond purchases and shrinking its  U.S. bonds balance sheet. Therefore, we must pay more attention to the details and outlook of the Fed's monetary policy and the rate hike rate on Wednesday night. The relevant details will give global investors insight into the Fed’s plan to tighten its monetary policies this year, directly affecting the market's investment sentiment.

 

GBP Could Test 1.3270 if the Situation Improves

In the past two weeks, the prospect of U.S. interest rate hikes has become evident, and the geopolitical tensions in Eastern Europe have caused European funds to flow into the U.S. dollar, pushing it to a nearly two-year high of 99. Suppose the Fed's interest rate hike signals tighter monetary policies, and the situation in Ukraine and Russia intensifies. In that case, it is believed that the US dollar could benefit and test the 100 mark, or it may reach the May 2020 high of 100.54. On the contrary, the dollar’s correction could test the technical support level at 97.73.


Following the Fed's monetary policy meeting is the Bank of England's interest rate meeting. Interest rate futures indicate that the Bank of England could raise interest rates by another 25 basis points to 0.75%. The reason is that inflation in the United Kingdom broke through its previous peak again in February. Based on the Bank of England's recent use of interest rate hikes to suppress inflation, I believe there is no suspense regarding the next interest rate hike. However, due to the tense relations between Ukraine and Russia and Western countries' joint sanctions against Russia, the British economy is facing significant challenges. Therefore, investors watched the situation develop cautiously, with sterling coming under pressure and falling to a 15-month low against the dollar. The GBP/USD could test the lows at 1.2860 if global geopolitics escalate further. On the contrary, if the situation changes and the investment sentiment improves, it is expected to regain lost ground and retry the 1.3270 or 1.3350 resistance levels.

Last Updated: 14/03/2022

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

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