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Morning Round-Up: FTSE, Dollar and US Fed rate rise


The FTSE is down 12 points in early trading this Thursday morning, largely due to a falling Dollar which has boosted the Pound, hindering the UK’s multinationals.

The Dollar was hit by the surprise election of a Democrat in Alabama overnight on Tuesday and the trend has continued despite yesterday’s interest rate hike.

FxPro analyst, Edward Anderson noted “The latest hike continues the Fed’s gradual move toward higher rates, which were cut to virtually zero during the financial crisis. It appears that the Fed will be sticking to its plan for 3 rate hikes in 2018 and hoping that a growing economy will eventually lead to higher inflation.”

ADS Securities Analyst, Konstantinos Anthis suggested “The head of the Fed decided to warn investors that the low inflation shows signs of stickiness and this could be an issue for the US central bank next year.”

Janet Yellen’s remarks suggested that any changes towards a more optimistic outlook will have to wait at least until we hear from Jerome Powell towards the end of Q1 2018 which led to a “sharp sell-off in the currency as traders looked to limit their exposure on the greenback.” added Anthis.

The Dollar’s problems didn’t affect US equities. Accendo Markets analyst, Mike van Dulken commented “The Dow Jones notched yet another record high on Wednesday after the Federal Reserve hiked interest rates and congressional Republicans reached an agreement upon proposed tax reform helping Caterpillar shares to soar, however the S&P 500 edged back from Tuesday’s record close despite a fresh intraday high as the Financial sector weighed. The Nasdaq also finished higher, climbing 0.2%.”

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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