Fed clearly delivered a hawkish hold overnight, signaling that two more rate hikes are underway. However, market participants appear skeptical about the Fed's aggressive posture. According to Fed funds futures, markets are still projecting interest rate to peak at 5.25-5.00%, anticipating just one more 25-basis point rate hike in July. Moreover, there's over 60% chance that rates will remain at this level by year-end. This sentiment was also reflected in performance of major U.S. stock indices, which closed mixed. While NASDAQ and the S&P 500 managed to end the day with gains, 10-year yield declined and settled marginally below the 3.8% mark. Although Dollar has been recovering, its upside momentum appears limited against European majors and commodity currencies. Meanwhile, Yen is taking the limelight from ECB rate decisions, experience steep selloff in Asia which triggered verbal intervention from the government. Euro also softens as markets await another ECB hike, but more importantly any forward guidance and the new economic projections. Australian Dollar is the strongest one as supported by strong job data, managing to shake off the impact of weaker than expected Chinese economic data. Technically, Bitcoin's break of 25242 cluster support (38.2% retracement of 15452 to 31011) is worth a note. The development argues that deeper correction is underway, with trend line support at around (now at 23230) as the first line of defense. Firm break there will pave the way to 61.8% retracement at 21393 or below. Any downside acceleration in Bitcoin could precede selloff in NASDAQ and overall stock markets. Let's see how it goes. |