As expected, the US central bank did not raise interest rates yesterday, but in its statement pointed to further increases in the near future.

1. The Federal Reserve surprised almost no one yesterday when it announced it would hold off on raising rates for the first time in months. However, the pause is seen as a bit hawkish as Fed Chairman Powell emphasized the Fed’s strong commitment to 2% inflation, he said that inflation remains high and that the fight against it still has a long way to go. Powell said further hikes later this year would be considered appropriate, signaling that the end rate of the current tightening cycle has not yet been reached.
2. Markets responded to the Fed’s hawkish pause by selling the US dollar and buying stocks, putting pressure on it the NASDAQ 100 index and the S&P 500 index to new 1-year high prices. Major Chinese and Japanese indexes also rose the Nikkei 225 index rise again to reach a new multi-year high price.
3. The markets are now awaiting the political meetings of the European Central Bank (today) and the Bank of Japan (tomorrow).
4. In the forex market, the US dollar is rising again, recovering its losses from yesterday, against its long-term bearish trend. In the medium term, the strongest currency was the British pound and the weakest was the US dollar. Trend traders will still look for long trades in currency pair USD/JPY which broke to a new 7-month high above ¥141 currency pair GBP/USD also made a new 1 year high yesterday. The Australian dollar is also quite strong. During today’s Asian session, the US Dollar is the strongest major currency, while the Japanese Yen is the weakest. Yen weakness is a notable feature of the Forex market todayas markets focus on the Bank of Japan’s policy meeting tomorrow and its strong focus on monetary easing, which is quite different from other major central banks.
5. Cocoa futures it rose again yesterday to hit another 7-year high closing price.
6. U.S. retail sales and jobless claims data will be released later today.