Shekel strengthening despite United States rate hike

Shekel strengthening despite United States rate hike

But the rate increase was already priced into most stocks.

Shortly after the opening bell, the Dow Jones Industrial Average fell 87.86 points, or 0.41 percent, to 21,286.70.

The Federal Reserve raised interest rates for the third time in six months, a sign that it expects continued growth, even in the face of some recent poor economic data.

The overarching message the Fed sent Wednesday was an upbeat one: It believes the US economy is on firm footing as it enters its ninth year of recovery from the Great Recession, with little risk of a recession. Unemployment dipped to 4.3 percent in May, a 16-year low.

The statement also said inflation “has declined recently” and in the next 12 months “is expected to remain somewhat below 2 per cent in the near term”.

Offshore one-year non-deliverable forwards contracts (NDFs), considered the best available proxy for forward-looking market expectations of the yuan’s value, traded at 6.958, 2.48 percent weaker than the midpoint.

Fed officials expected the economy to grow 2.2 percent this year, compared to their forecast of 2.1 percent in March.

With regards to GDP, growth has been positive over the years but not as high when compared to GDP of economies such as India and China. A neutral rate implies no negative effect on growth.

According to investing.com’s fed rate monitor tool, almost 90% of traders expect the Fed to raise rates from 0.75-1% to 1-1.25%. The policymakers signaled that they still expect to raise rates once more in 2017.

The yellow metal tends to fare better when interest rates are low and often struggles when interest rates increase. If you’ve got a $75,000 mortgage or home equity loan – not on a fixed rate – you’ll be paying about $15-$20 more in your monthly payment. Neel Kashkari, chair of the Federal Reserve Bank of Minneapolis, wanted to maintain the existing target range for the federal funds rate.

The Fed revealed its plans to begin reducing its $4.2tn portfolio of Treasury bonds and mortgage-backed securities left over from the 2008 financial crisis. Meanwhile, the Bank of Japan begins its two-day meeting today. While inflation has moderated in recent months, the Fed seems to be attributing this mostly to one-off factors.

If it truly is indicative of a slowing economy this may put the United States dollars at risk of further retreat as it may jeopardize the FOMC outlook of one additional rate hike beyond June, (many investors think the September meeting looks the most likely date for this 3rd hike). There was only one rate increase in both 2015 and 2016.

Investing.com offers an extensive set of professional tools for the financial markets. USA stock markets were relatively flat through afternoon trading, while the yields on 10-year Treasury notes had fallen to 2.11 percent. After a late tumble in technology stocks, the Nasdaq composite lost 0.4 percent, to 6,194.89.

CURRENCIES: The dollar edged lower to 109.56 from 109.57 yen. It is roughly flat against the pound, at $1.2758.

The US Federal Reserve announced it was raising short-term interest rates by a quarter percentage point on Wednesday as the central bank continued to unwind the massive economic stimulus plan brought in after the great recession.