The Federal Reserve did not surprise the markets, keeping the key interest rate in the range of 1.00% -1.25%, but expressed confidence in the economy with the promise that the accumulated portfolio of purchased bonds would be cut “fairly soon”. For the most part, these bonds were bought by the Fed in the years after the 2008 crisis, thus making money into the economy.
The plan to cut the bond portfolio of the bank was first announced at the June meeting and markets interpreted the Fed’s rhetoric as a sign that concrete action would be taken at the September meeting. The Fed’s monetary policy committee said the economy is progressing moderately, and the labor market is in a sustainable state. However, it was stated that inflation is slowing down,
Investors kept their positions in gold after the decision, and the noble metal managed to stay on the 6-week highs. The spot price remained almost unchanged at $ 1 261.30 per ounce, and futures with delivery in August saw a rise in price by almost a percent to $ 1 261.40 per ounce. Bond yield returns declined, the 10-year bond ended the session with a return of 2.28%.
The dollar index, measuring the strength of green money against a basket of 6 currencies, dropped to 93.44 points, standing 10% below the 14-year high at 103.82 on January 3. According to technical analysts, the closest support level is 93 points, which is the bottom of June 2016, and the next support is the 16-month bottom reached in May.
After three consecutive sessions with appreciation, the price of oil fell on Thursday. Still, the price is close to 8-week highs, as investors are relying on a larger-than-expected decline in US crude oil stocks. Last week, we saw a 7.2 million barrel decline, with forecasts for 2.6 million barrel drops.
Petroleum analyst Jenna Delaney commented that the four consecutive weeks of stock decline are astonishing as it is the time of the year in which stocks are traditionally growing. Recently, optimism over overcoming oversupply and oversupply has increased in the world, and moods have been boosted by Saudi Arabia’s promise to reduce its exports next month.