Themes

• General mood is “risk off”
• U.S. FOMC leaves U.S. interest rates unchanged
• Fed’s Powell makes hawkish comments to support the USD

What’s Moving

The key overnight story was the U.S. FOMC, where U.S. officials left interest rates unchanged, as was broadly expected. The statement however noted that with inflation still above 2% and with a strong jobs market, the Fed expects to hike interest rates “soon.”

After the release, Fed’s Powell hit the tapes as hawkish as ever, which added fuel to the “U.S. rates are going up soon” camp. We are still expecting a hike next month.

The Dollar surged on the press conference headlines, which saw commodity currencies underperform on the day.

Thoughts

Expect consolidation on the day in Asia today after USD strength overnight and with Australia back from holidays. The local data calendar today sees:

• Australian Import Prices (E: +1.4%)

Pivot Points