Morning Market Update
Spread Betting 19 March 2015
European equities are set to start mixed as traders take different spins on the dovish FOMC overnight.
Whilst the UK FTSE is still basking in the post budget giveaway, the cooling of hawkish temptations from the Fed has added to that bullish sentiment.
However, over on the continent the Germans, the world's third largest exporter, aren't enjoying the prospect of a weaker dollar/stronger euro hitting their economy.
This has led the German DAX lower on the open, whilst the French CAC doesn't seem to have made up its mind yet.
As widely expected, the FOMC dropped the code word 'patience' from its statement, however, it was replaced by dovish rhetoric from Yellen.
The statement spurred speculation that the Fed is in no rush to raise interest rates and highlighted its uneasiness about the modest economic data seen recently.
With an imminent rate hike seemingly off the table, the Dow Jones rallied steeply, gaining 218 points to 18,068.
Last night, the Federal Reserve appeared less confident about the US economic growth outlook and its policy statement reflected that cautious approach.
In turn, the dollar tumbled steeply and the EUR/USD pair, despite the ongoing troubles for Greece, surged by 277 points to close at $1.0867 after hitting an intraday high above $1.10.
The US Energy Information Administration released its weekly crude oil inventories report yesterday which showed a larger than expected build of 9.62 million barrels against forecasts for an increase of just 4.0 million barrels.
However, the trump card was the Fed scaling back estimates for interest rate hikes which hit the dollar and in turn sent crude prices sharply higher.
The FOMC acknowledged a moderating growth pace and lower inflation level which triggered a buying frenzy in gold as the metal climbed by the most since January.
Interestingly, today marks the last day of the current system for fixing the gold price used by miners or banks to value bullion.
The twice-daily phone call will now be replaced by a more transparent online auction.
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'Morning Market Update' edited by Jonathan Sudaria, updated 19-Mar-15
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