The Euro took a hit in yesterday’s trading session against the US dollar after the release of the latest minutes meeting from the US Federal reserve indicated that an aggressive round of interest rate hikes was on the way.
Federal Reserve officials for sometime have been pushing the need to raise interest rates quickly and possibly more than markets anticipate to tackle inflation, which is sitting at its highest level in over 40 years and shows no signs of slowing down.
According to the minutes, not only did policymakers see the need to increase benchmark borrowing rates by 50 points over the next few meetings, they also reiterated that similar hikes may be forthcoming towards the end of the year.
“Most participants judged that 50 basis point increases in the target range would likely be appropriate at the next couple of meetings,” the minutes said. In addition, Federal Open Market Committee members indicated that “a restrictive stance of policy may well become appropriate depending on the evolving economic outlook and the risks to the outlook.”
At his post meeting news conference, Fed Chairman Jerome Powell was even more forceful with regards to inflation and put the market on notice that the Fed would not discontinue rate hikes until there was a clear indication that
Looking ahead today, the main drivers of the EUR/USD currency pair will be the release of the latest GDP figures from the US which are expected to hit the market at a solid 8 percent and if analysts are correct, it may spell trouble for- the Euro.
The initial jobless claims figure will also hit the market during the American session, and this is bound to draw a lot of interest as the Fed has constantly stated that future rate hikes will be closely connected to a solid employment market.