A not so friendly FOMC Day – North American Session Market Wrap for March 18

Log in to today's North American session Market wrap for March 18

Today welcomed a much-anticipated FOMC session, and Participants probably did not hear what they wanted to hear.

After an already quite intense morning, in which assets were going back and forth to fight another rise in Energy Commodities, the Press Conference pinned down risk sentiment.

The initial catalyst for the rise in Commodities was the new escalation of attacks on Energy infrastructure in the Middle East.

WTI Oil quickly bounced from $92 to $99, invalidating the Head and Shoulders and forming what resembles the basis of a range, but Brent is where the action gets scary.

The London-Exchange Petroleum quote saw a significant bounce, now consistently above $105, as President Trump threatened to stop defending the Strait of Hormuz to drag Allies into defending the most important 10 km stretch in the world.

Crude initially eased ahead of the FOMC press conference but found what it needed to keep rebounding as Iran retaliated for the overnight attacks on its gas infrastructure.

Oil is currently squeezing at the close, so expect the path ahead to be rocky.

Regarding the Federal Reserve, they decided to maintain their rates at 3.50% to 3.75%, unchanged for the third consecutive meeting.

The initial text wasn't decisively hawkish, but looking at the high expectations for better news, Markets were disappointed.

As Powell's penultimate Press Conference was unfolding, the US dollar saw another meaningful bounce. This further pressured an already rough trading session, particularly against Stocks and Metals.

In his remarks, the Fed Chair emphasized the inflationary pressures and supply shocks from the post-COVID era, which are not pointing to any dovish direction, and that helped the USD rally.

Still, the speech itself wasn't so hawkish either, just because he didn't lean into hikes after a couple of questions asking whether such were on the table. It seems that traders will now only be looking at Oil and how it will increase inflation prospects.

Read More:

• FOMC pauses rates yet again, Dollar explodes – Economic Projections and (Updated) Market Reactions
• Dow Jones back below 47,000 as traders prepare for high-impact FOMC – US Stock Market Outlook & Levels
• Morning Market Check – Energy infrastructures attacked in Iran, Bank of Canada holds rates, & US PPI
• Gold (XAU/USD) price slides 3.3%. Is Gold offering a discount or facing freefall heading into FOMC?

The Stock Market wasn't off to a great start in this morning's action, but things got worse as the Press Conference and rises in Crude further dampened risk-appetite.

A few individual names in Producer Manufacturing, Energy and Tech have arisen, but the overall wave is red.

The Dow Jones once again led to the downside, and the technicals aren't looking so optimistic – Tomorrow will be a very important test for bulls.

Today's session was not friend to asset managers, particularly those hoping for drops in Oil and the US Dollar.

Energy commodities have exploded, particularly after their overnight slump, after the latest escalation news – The Petrodollar naturally raced higher, a process also magnified by a Flattening rate curve and a far from dovish Press Conference.

Leading to the downside are Metals and Cryptos, but Stocks did not fare much better.

FX performance today was centered around the two Central banks giving their rate decisions, with the Bank of Canada and the Federal Reserve meeting hawkish pauses helping the prospects for their respective currencies.

But the rise in Oil also had its role to play.

On the other side of the performance spectrum, European currencies (particularly the CHF) and Antipodeans. These ones don't tend to enjoy bullish Crude sessions.

It's not because today's session was so busy that traders can suddenly relax.

Quite the contrary actually, and there will be some for everybody!

Not even counting the rise in Oil, expect movement for the Kiwi (NZ GDP), the AUD (Australian Employment), the Yen (with a very important Bank of Japan Rate Decision, tonight between 19:30 and 20:00). Check out our preview for the event right here.

There will also be a flurry of other Central Bank decisions, including the Swiss National Bank, the Bank of England, and the ECB – All will be important to track to see how they preview upcoming inflation risks regarding to the Iran developments.

Keep a close eye on sentiment and Middle East news.

Safe Trades!

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