Dollar Skyrockets Post Fed; Stock Futures Plunge


The dollar index which measures the greenback against a basket of major currencies soared to 91.66, its highest level since April, recording its strongest rally since June 2020, post the Federal Reserve monetary policy meeting. The bank kept the fed funds rate and asset purchases unchanged as expected but raised the Interest on Excess Reserves. However, several factors boosted the dollar among them, the dot plot which showed that more members are expecting interest rates to rise sooner than previously anticipated, the raised inflation projections, and the fed's approach to the latest inflation numbers. The EURUSD fell sharply to $1.1945, the GBPUSD declined to $1.3965, and the USDJPY rallied to 110.80.


Futures tied to major US stock indices declined significantly amid a more hawkish approach from the Federal Reserve. The Fed kept main policy settings unchanged, but the concerns of rising inflation were clear, which could trigger a faster tightening for policy. The Dow Jones Industrial Average futures fell to 33686, the S&P500 futures dropped to 4181, and Nasdaq futures plunged to 13840.


Precious metals prices crashed as the dollar soared along with Treasury yields after the Federal Reserve policy meeting. The US 10-year yields rallied to 1.594%, driving real yields higher. The price of a gold ounce fell to $1803, the lowest since early May, the price of a silver ounce declined to $26.60, and palladium fell to $2766.


Oil prices plunged from their highest levels in years despite the drop in inventories, as the dollar strengthened. The dollar rallied significantly against commodities supported by higher treasury yields. The US Energy Information Administration reported a drop of 7.355 million barrels in US crude inventories. Meanwhile, the Saudi Energy Minister confirmed that the OPEC+ plan is working well and supporting prices. The West Texas Intermediate crude July contract fell to $71.31, and the brent blend august contract dropped to $73.54.

Major Economic Events

GMT Country Event Expectation Previous
9:00 EZ  CPI (MoM) (May) 0.3% 0.6%
12:30 US  Initial Jobless Claims 359 376
12:30 US  Philadelphia Fed Manufacturing Index (Jun) 31.0 31.5



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