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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Fed signals prolonged high rates; USD jumps on hawkish stance

No surprise in the US on Wednesday evening, the Federal Reserve kept its interest rates in the current 5.25%–5.50% range. However, the US dollar rose when Jerome Powell took a firm, hawkish stance.

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The Federal Reserve

No surprise in the US on Wednesday evening, the Federal Reserve kept its interest rates in the current 5.25%–5.50% range. However, the US dollar rose when Jerome Powell took a firm, hawkish stance. Updated quarterly projections show the central bank may still lift rates one more time this year to a peak 5.50%–5.75% range.

The Federal Reserve (Fed) foresees half a percentage cut in 2024. As of June, Fed officials had expected to cut rates by a full percentage point next year. Policymakers now see the fight against inflation lasting into 2026 and believe they can succeed without damaging the economy.

USD/JPY

The USD jumped to set a fresh six-month high on the news. USD/JPY set a new 2023 high, taking it above the ¥148 level. Cable also broke the May 25 support to set a five-month low and remains under selling pressure this Thursday.

The Bank of England

At lunchtime, the Bank of England will decide on its rates. Before Wednesday's inflation data, all but one of 65 economists polled by Reuters predicted Andrew Bailey would raise rates by 25 basis points to 5.5%. A hike is still on the cards this morning, but as soon as CPI data was out on Wednesday, investors piled into bets on the Bank of England (BOE) keeping rates steady.

Consumer price inflation in Britain fell unexpectedly to 6.7% in August, and core inflation also decreased to 6.2% after staying unchanged at 6.9% in July.

JD Sports Fashion

Elsewhere on the equity market, Next raised its full-year profit forecast again after reporting a 4.8% rise in pretax profit. JD Sports Fashion increased its interim dividend back to pre-pandemic levels.

FedEx

Over in the US, FedEx surprised investors with a huge profit beat. Earnings came in at $4.55 per share, a jump of 32% year-over-year (YoY), smashing the $3.70 the Street expected as the result of its cost-cutting programme. It also poached customers from rivals UPS and Yellow. Revenue came in broadly in line at $21.70 billion.

FedEx is not an all-session stock on the IG platform. The stock is expected to jump at the open on Thursday afternoon. In extended trading on Wednesday, FedEx shares rose as much as 5.7%.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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